The Valuation Arbitrage: Maximising Your Financial Planning Business’s Value

Succession planning in financial planning businesses is often overlooked, yet crucial for securing your financial future. At Coastal Advice Group, we understand the significant financial benefits that come with investing in your business and planning ahead.

Let’s explore how being part of a larger group can enhance your business’s value and your personal outcomes.

  1. Selling a ‘Client Book’: When considering your options, selling your client book can provide immediate capital and flexibility. Potential buyers evaluate your client demographics and revenue streams, offering a multiple of recurring revenue based on your involvement post-sale. Whether you choose to walk away or stay on as an employee, this option allows for strategic capital raising.
  2. Merging Your Business: Merging with a like-minded company aligns your vision with a larger organisational stra tegy. This can position you as a shareholder, manager, or financial adviser within the expanded entity, contributing to and benefiting from its future success. Aligning values is crucial here, ensuring a smooth integration and shared business ethos.
  3. External Market Sale: Selling your business on the open market shifts valuation focus to EBIT and considers past new business revenues. A well-prepared business with robust systems, processes, and a succession plan commands higher valuations. This route offers potential for continued leadership or exploring new roles within the acquiring group.

Choosing scale over solo operation can significantly enhance your financial outcomes, and offer the following benefits:

  • Access to qualified buyers with financial capacity.
  • Established staff, resources, systems and processes.
  • Enhanced management capabilities and industry experience.
  • Smooth transition planning and execution.
  • Provide more value to your existing clients with additional “product” lines, such as Aged Care advice, Insurance claims support, or Lending or Accounting offers to your existing client base.

At Coastal Advice Group, we specialise in maximising the value of financial planning businesses through strategic partnerships and meticulous succession planning. Whether you’re considering a sale, merger, or seeking growth opportunities, our expertise ensures you secure the best financial outcome, while designing your ideal role.

Let’s connect and discuss how Coastal Advice Group can empower your succession strategy. We’re committed to exploring win-win possibilities that benefit all stakeholders.

All the best.

Daniel Brown
CEO of Coastal Advice Group | Host of Dad’s Talking Dollars Podcast
July 1, 2024