Advisors who are thinking about adding a partner to their practices have several questions to consider before making an offer, according to the authors of “How to Value, Buy or Sell a Financial Advisory Practice,” Mark C. Tibergien and Owen Dahl:

  1. What is the desired average income per owner?
  2. How much revenue does the firm need to generate to achieve that average?
  3. How much revenue does the firm need to generate to maintain a reasonable level of profitability after fair compensation is paid to the owners?

The authors recommend firms looking to expand should aim to earn between $400,000 and $750,000 of revenue per partner to avoid diluting income.

Source: “How to Value, Buy or Sell a Financial Advisory Practice,” Mark C. Tibergien and Owen Dahl