Financial Planning
Secrets to selling revealed

Standards International founder Michelle Hoskin gives her tips for successfully selling a financial advice business.

Appearing at the 2019 Association of Financial Advisers' National Conference, Hoskin revealed that businesses she had coached were worth much more on the open market than similar businesses that hadn't benefited from her experience in the industry.

The reasons those businesses were more valuable was because of the "deep dive" Hoskin does into what works and what doesn't.

Her first suggestion was that financial advisers considering selling should carefully consider their timeline - Hoskin's suggested ideal timeline for selling an advice business is 10 years.

"The first thing you have to do when you're thinking of exiting is get it valued," she said.

"When a business is valued it sharpens the mind because you now have a number."

Her next piece of advice was to think like a buyer rather than a seller.

"If you are building a business to have forever it's emotionally built," Hoskin said.

Businesses that are built to be sold have a more commercial foundation, she said, warning that if an adviser struggles to take holidays because they are so invested in their clients - realistically, it's going to be very difficult for them to sell the business.

Hoskin added: "Do you have a business today that could run without you or not? Are you the only income generator? Do you micro-manage your team?"

An integral part of successfully selling an advice business is to pick a date that you plan to be completely out of the business by and plan for what your life will look like after that date, she said.

That plan should be detailed and involve what will keep you active and bring you satisfaction once your business is no longer in your life, Hoskin added.

Interestingly, one red flag for buyers is if an adviser says they are "just going to have coffee with friends and relax" once they sell their business.

The buyer is likely to suspect the adviser isn't prepared to not be involved with the business at all anymore - and may present a future risk, she said.

"This is a people business," Hoskin said.

She then provided delegates with some practical advice for keeping a moral compass during a sale process and supporting clients and their team through a sale process.

One of Hoskins suggestions was to dedicate a percentage of the proceeds of the sale of the business to be split amongst team members to incentivise them to remain dedicated throughout the sale process.

She added that this same technique could be applied to clients.

Sharing a case study, Hoskins said one advice business owner she coached through a sale decided to split 25% of the sale of the business amongst the employees and 25% amongst the clients.

Read more: Michelle HoskinStandards InternationalAssociation of Financial AdvisersAFA
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