Archive for May, 2019

Exit_1_3Many factors affect business equity value and succession payouts. Succession and exit planning start with the business model which for financial planning firms includes type of revenue streams and their correlation to selling price; personal, business, and economic timing; and constant attention to business equity value. The owner needs to pay attention to its customer concentration, employ high yielding capital with investment in human capital with the right talents and chemistry; and have better control of the operating expenses to streamline process. Adjustments to selling price can results from technology platform, key person dependency, location, sales or gross revenue, client retention risk, market demand, and type of deals or financing. The revenue size of the practice positively correlates with the selling multiples of the sales revenue. Also, employing the appropriate appraiser can create a favorable selling price. Considerations for growing business equity value include deciding on the best type of practice for you: solo, silo or ensemble practice. Team structure and compensation with career tracks and ladder training structure is also important. Opting for appropriate exit/succession planning is a choice for a positive future.

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