The Pandemic is Raising the Need for Seller Advocates

The pandemic has brought with it many changes and a great deal of uncertainty in the markets. As a result, many older advisors are considering their options, including the possibility of selling their practice. Because of the uncertainty and dips in the market, many experts have been predicting bargains for would be buyers looking to make an acquisition. We disagree and believe that a seller can and should still get a reasonable return for the years they spent building their practice. But the pressure to sell now and sell at a discount is building in the market and highlights the need for seller advocates in advisor successions.

What a Seller Advocate Does

A seller advocate, often called a succession consultant, works on behalf of the seller in the succession/sale. They can work with the seller when they have a successor in mind or when they don’t and need to list their practice in the marketplace in order to find the right successor. In that instance, advocates help locate and vet potential buyers and represent the seller in negotiating the deal. Throughout the process they operate in the seller’s best interest. In some cases, such as when there is a named successor, the consultant can serve both parties in a transaction, but usually they are working solely on behalf of the seller.

Why You Need a Seller Advocate to Sell Your Practice

There are so many reasons why it’s important for you to have someone working on your behalf in a transaction, versus doing it on your own or relying on your broker-dealer’s succession team.

You don’t know what you don’t know.

Selling practices isn’t part of your day-to-day job. There are so many things that go into it and that are necessary for a successful transition. It’s important to leverage an experienced consultant who knows what to look for, what challenges to expect, and how to protect your interests.

You need someone working for your best interest.

Oftentimes, though well meaning, listing sites and internal succession teams don’t actually represent the seller’s interests. Their primary client is the buyer because the buyer will remain a client after the practice is purchased. This is why it’s important to have an independent party working on your behalf. Especially in times like now, when many experts who work primarily with buyers are advocating for discounts and “fire sales,” and not respecting the value you have built over years of hard work.

You get one shot to do it right.

When it comes to selling your practice, there are no do overs or second chances. It’s a situation where you don’t want to have regrets. Leveraging a succession consultant lets you tap into their knowledge and experience to give you the best possible succession for your unique practice.

Selling your practice is their only job, leaving you to focus on yours.

Some advisors try to DIY their practice sale. But it’s hard to do that while running your practice. It takes time, sometimes years, to find the right successor. Its best to focus on what you are good at and let an experienced consultant handle your succession.

Most importantly, a succession consultant will give you perspective and guidance. This is important even in good times, but right now it is critical that you rely on a sound and experienced voice who doesn’t expect you to discount your practice to make a deal. There are ways to structure deals that accounts for temporary fluctuations in the market but still lets you garner a fair price. Don’t feel pressured to make a deal just because the market dips. Like we said, you only get one shot to sell your practice. Do it right by working with a succession consultant.

If you are thinking about selling your practice and would like to discuss your options, you can schedule an appointment with one of our succession consultants today.

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