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Toward the end of a career of successfully helping clients lead better financial lives, exiting advisors naturally want to know that whoever buys their practice will uphold their legacy of service. There is an undeniable pride in making sure clients experience the same level of care and attention once a successor takes over the business.

The catch is that exiting advisors, if they are not careful, are limited in how much control they can exert once a sale is final. Successor advisors are bound to want to change something about your practice. It’s just a matter of what and when. Indeed, they could alter technology, clientele, service model, leadership style, staffing, branding or office locations.

These shifts can be smooth if they are well thought out and implemented methodically. Or there could be problems if they happen too abruptly. Common issues include workflow bottlenecks or miscommunication with staff and clients, which may hinder the firm’s profits and damage the exiting advisor’s legacy.

Here are some suggestions to minimize the chances of troublesome disruptions during and after a transition.

Goal Assessment

Exiting advisors have a responsibility to scrutinize the goals of potential successors before committing to a deal. Have an honest and thorough conversation with a potential partner, seeking to create the types of personal connections that make assessing their goals much easier.

If the successor is the exiting advisor’s son or daughter, this is clearly a simple process. The same likely goes for assessing a junior advisor who has been mentored by the seller. In each instance, the exiting advisor will know whether the buyer not only exhibits the drive, values and expertise to maintain the business’ established service culture but has goals that align with the long-term vision of the firm.

However, if the successor is an outsider, making that determination is far more difficult, with the seller having a much shorter window of interaction on which to base their decision.

Whether the successor is a family member, trusted apprentice or a new acquaintance, goals-focused due diligence is necessary for exiting advisors who care about their legacy.

Fact Finding

Tell the potential successor what aspects of the business should remain consistent after the transition, and why doing so will bolster revenues, profits and operational efficiency, supporting your case with quantitative metrics.

Also, ask what types of changes they would make to your business, when they would begin making them and what the implementation plan is. If the proposed changes are drastic, ask them to support their rationale with hard data. This might help ease your concerns or potentially help you to respond with data of your own.

Observation is the other major part of assessing a buyer’s goals. Notice how they interact with staff and clients. If they already work on your team, that’s fairly straightforward. If they are an outsider, this could mean an onsite visit, or perhaps many of them. Odds are, the way the advisor behaves now is how they would conduct themselves once the acquisition is complete.

Deal Terms

Having an appreciation for the successor’s goals should influence what types of terms the exiting advisor crafts for the transaction. As the seller, you decide how much of your practice you are willing to relinquish, and at what pace. In fact, the buyer’s financing needs could give you added leverage in negotiations.

For example, if the buyer requires a seller note to fund the purchase and demands clawback provisions linked to client retention, the seller may be able to stipulate how long he or she can stay on with the practice after the buyer takes over, the types of staff and client meetings in which the seller can continue to participate, as well as what business decisions remain within the seller’s purview until the transition is complete.

Properly written succession planning deal terms benefit both parties. Often, the successor learns firsthand what works and the exiting advisor accepts that certain aspects of the practice must change, while staff and clients acclimate to the change of control in a calm and orderly fashion. By the end of the process, you can leave knowing that your successor’s goals are sufficiently in line with upholding your professional legacy.


Patrick Farrell is CEO of Investacorp, a Miami-based independent advisory and brokerage firm that is a subsidiary of Ladenburg Thalmann Financial Services.