As part of your due diligence process when you are considering purchasing another firm, there are certain bits of information you must uncover. Following are a few categories and questions culled from the due dligence literature.


  • How similar are the seller’s clients to your own?
  • Is the orientation toward fees and commissions similar?
  • What have the seller’s clients been told about fees or commissions before the transition?
  • How long have clients been with the seller?
  • How old are the clients? There is a huge difference in value between a book of 80-year-old clients who have been with an advisor for five years and a book of 55-year-old clients who have been with an advisor 15 years.
  • What is the relationship between the seller and her clients, and how does that match your style?
  • Is a specific niche or a broad swath (like retirees) targeted?
  • How much trust exists between seller and clients?

Operations and Technology

  • Does the seller use a contact relationship management system (CRM), or is the history of the business on yellow pads scattered around the office? If there is a CRM system, can the data be transferred easily to the system you use?
  • How easily can investment and performance history transfer to your systems? Of course, client stickiness increases when both buyer and seller use the same broker/dealer or custodian.

The Staff

  • Is staff transfer part of the deal? If so, is the staff worth retaining?
  • How will the staff fit into your current organization?

The Financials

  • Does the seller have at least three years of income statements and balance sheets documenting the fiscal health of the company?
  • Has an effort been made to look at the ROI on client niches?
  • Does the seller embrace generally accepted accounting principles or creative accounting?
  • Is there data on gross profit margin and operating profit margin?