Financial Business Valuation
All financial advisors should periodically conduct a financial business valuation to determine the value of their firm or book of business. The reality is, however, that most advisors do not take the time to determine what their practice is worth. This information becomes especially important when you are getting ready to evaluate your potential sale, exit or succession options. If you are at that point with your practice, your shrewdness as a veteran advisor should lead you toward an outside mergers and acquisitions (M&A) firm that will help you determine what your firm or book of business is worth.
One of the fundamental services we offer at adviserXchange is assisting clients with a financial business valuation. While we do not provide formal valuations ourselves, we could not offer buyer and seller services to financial advisors without staying abreast of the market values of financial practices that are sold. As a result, we can usually help you determine an informal range of value for your practice with only limited information on the practice being provided to us. Formal third-party evaluations can also be arranged by adviserXchange once a decision is made to move forward with our services.
A Financial Business Valuation Can Help You Assess Your Purchase and Sales Options Through AdviserXchange
There are different methods available to provide a valuation of a financial or investment business. Small to mid-sized practices oftentimes sell on a multiple of revenue approach. Larger practices, however, are typically valued on the basis of a multiple of the firm’s net operating cash flow. These numbers and their corresponding values may be further adjusted up or down based upon factors such as extraordinary expenses and future growth expectations. Because the valuation of a business is not an exact science, the ideal outcome is to derive a range of value for the business to help you make an informed decision with your purchase or sale.
We know that valuation measures are only one factor in buying or selling a financial business. To the greatest extent possible, buyers and sellers should also be compatible to help ensure a successful transition of the practice over the long term. Every client at adviserXchange is required to complete a comprehensive profile describing their practice as well as their goals and objectives to help ensure compatibility among buyers and sellers. Once a match has been established, we then work with the parties to help ensure an efficient and timely closing of the transaction.
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