The sale of your financial advisory practice will take a significant amount of effort and planning. Even if you are a self-described maverick, selling your firm is not a process that you should attempt to do by yourself. Even for the smallest practices, there are a substantial amount of federal, state and local ordinances as well as significant tax ramifications to consider. There are also countless legal considerations to take into account depending on the complexity of the deal that you are attempting to structure.

The more immersed that you get into the sales process, the less time that you will have running your firm at the very moment when the valuation matters most. The last thing that you want to have happen is a major downturn in income, or client migration because you are too consumed with the selling process. Selling your practice is something that you will probably only do once in your lifetime, and this is one task that you will not have the chance at build up experience before you execute the transaction.

Building Your Dream Team

There are a number of roles that are needed to effectively sell your financial advisory practice. Although it is likely the same person or firm may serve in more than one capacity, you are likely to have a need for the following specialists:

  • CPA or Accountant

  • Tax Specialist

  • Attorney

  • Business Broker or Practice Sales Consultant

  • Banker or other Financier

Not all of these positions need to be filled for every practice sale. Your needs will be determined by the size and scope of your practice and the complexity of the deal. At a minimum, you’ll need to involve your lawyer and accountant, who may also serve as your tax adviser.

Role of Your CPA and Attorney

Your attorney and CPA are two of the key people that you need to execute the sale of your practice. It’s crucial that these two professionals work well together. If they are not on the same page, they may end up duplicating some of each other’s efforts, which means you may pay double for the same service. If you do not already have existing relationships, you may want to use an attorney that your accountant recommends, or vice versa, specifically because you’ll know that they respect each other and can work together efficiently.

It is essential that at least one of your team members be an expert in dealing with the tax aspects of business sales and acquisitions. The sale will have tax consequences that must be sorted out, and your state may require certain documents to be filed when a business sells all or most of its assets. If a partnership, an LLC, or a corporation is involved, the complexity of the deal could quickly mushroom. Generally this will be the role of your accountant, but many attorneys are also highly qualified when it comes to the tax side of these types of sales.

Even the smallest practices will need a lawyer to look over the sales contract. If your contract is not drafted properly, you may not only fail to get all your money, but you can also be exposed to potentially huge liability claims by the purchaser, creditors, customers, employees, etc. In addition to the final sales contract, you may also require a long line of legal agreements including confidentiality agreements, memorandums of understanding, as well as providing assistance in hammering out the final terms of the agreement.

Do yourself a favor and involve these professionals early to ensure that your deal flows smoothly. The additional upfront costs can save you time, money and headaches down the line. It will be money well-spent.

Did this answer your question?