IN FOCUS6-8 min read

Thinking about selling your practice? Here’s what you need to know.

Advisers looking to sell their business may find themselves with a bewildering range of options. How should they evaluate their choices and decide on the best approach for them, their clients and their staff? An acquisitions specialist at Benchmark Capital gives her view.

Financial adviser selling business


Nick Paisner
Head of Editorial

Like the doctor that neglects their symptoms, many advisers will spend years helping their clients manage the transition to retirement, but may overlook their own plans. For those looking to sell, it remains a buoyant market with a range of acquirers. But how can advisers get their business ship-shape to ensure the best price and a smooth transition?

Starting early is every bit as important for an adviser looking to sell their business as it is for a client building up a pension. Planning at 60 for a retirement at 65 will give advisers more choice, allow them to consider their options carefully and manage the transition for clients and staff effectively. Leaving it too late risks being a forced seller

Simon Cooper, head of Discretionary Fund Management at Cazenove Capital, says: "We've worked with many business owners over the years, including financial advisers, helping them plan around what can be a complex process. A successful sale can fund a comfortable retirement. However, it is essential for advisers and other business owners to start thinking early on about how the wealth arising from a sale will be structured and managed."

A range of buyers

There is currently a broad array of potential buyers in the adviser market. The industry remains fragmented and this has attracted private equity groups, consolidators and specialists to the market. This gives advisers choice, but also complicates decision-making. Financial advisers have built enduring relationships with clients and staff and want to ensure that both sets of stakeholders are treated properly. This is particularly true for local advice groups, where an adviser may meet their clients on the golf course or high street long after retirement.

To find out more about selling an adviser business, we spoke to an acquisitions specialist at Benchmark Capital, a division of Schroders that provides a broad range of specialist services to financial advisers.

Lucy Grier, Senior Acquisitions Consultant at the group, says: "There are firms where acquisition is their business model. There are other firms where acquisition may be just one element of a complete end-to-end solution for advisers – as is the case with Benchmark. If an adviser is looking to sell their business and doesn't want to change their business fundamentally, as some acquirers require, they need to think carefully about the buyer."


There is no magic formula for getting a business fit for sale, says Grier. "We are looking for well-run, low risk, well-managed firms, where liabilities are managed effectively. It doesn't matter if you're planning to sell your business, pass it onto staff or carry on in a consultancy capacity, 85-90% of the things an adviser would do for a sale are the same as running a good business. We are looking for operational efficiency, but moving away from manual processes is a good thing to do anyway."

However, all buyers will be looking for return on investment and advisers need to look at the motivation of the acquirer. Grier says: "For a lot of models, they can only make money if they digitise the proposition, increase fees or grow the firm quite rapidly. Where there's a lot of private equity capital backing, there is a need to make money quickly, perhaps over three to five years." For some advisers, this might work, but others will want an acquirer to have a longer-term perspective.

Advisers can often tell an acquirer's intentions by the way they value the business. If a buyer is willing to pay a multiple of assets under management, they are probably just looking for the assets rather than wanting to preserve the business. An acquirer who cares about the long-term strength of the business is far more likely to look at its income and cashflow.

There are risks to valuations today. Regulatory changes may put pressure on fees and wage inflation is seeing staff costs rise. Equally, with markets volatile, assets under management may be stagnant or falling. This will all feed into the valuations acquirers are willing to place on a business. Acquirers are likely to be especially focused on the resilience of an adviser's income, Grier suggests.

Regulatory risks

Grier says that MiFID II, and the particularly consumer duty rules, could influence valuations. She says: "It's very difficult to establish that every single client has been serviced in the way the firm thinks it has. We have seen some directly-regulated firms where clients had almost certainly been treated properly, but they couldn't evidence that was the case. They may have charged a 1% ongoing fee for a specific service, but there was no evidence it had been delivered."

She believes buyers are likely to place more emphasis on showing their workings, moving from a "say you've done it, to show you've done it" framework. Technology can be key to resolving this for many advisers with the right systems helping them provide this evidence. Again, advisers need to plan ahead.

IR35 is also a consideration for buyers in businesses with a lot of self-employed advisers. It is worth addressing this potential problem before a sale.

That said, for most buyers, reputational risk is their greatest concern. Grier says: "Regulatory risk can be quantified. Reputational risk is far harder to measure."


A final consideration for many advice firms is how to communicate the change in ownership to staff and clients. If owners don't get this right, staff will vote with their feet and clients will follow them. The last thing a responsible acquirer wants is the business to disintegrate, with clients and advisers leaving in the wake of the owner's departure.

Grier says: “It is about finding right time and key messages. Ideally, it should be a positive story about the continuity of the client relationship. The adviser needs to emphasise that they have chosen a safe pair of hands for clients and staff will be well-looked after." If the adviser has given themselves enough time, it allows them to work with the acquirer to manage the transition more effectively.

Grier says: "How an adviser sells their business is the second most important decision after launching it in the first place." It requires careful thought and preparation to make it a success. Once an adviser has made the sale, they need to ensure their money is appropriately managed. A discretionary manager can take on the burden, allowing advisers to enjoy their retirement free from worry about what's going on in markets.

Simon Cooper


Phome: +44 20 7658 1343

Lucy Grier


Phone: +44 1403 338746

For information purposes only and nothing in this article/on this slide should be deemed to constitute the provision of financial, investment or other professional advice in any way. You should seek professional advice for your individual circumstances. This communication is for information purposes only and is based on the author's understanding of the law in force at the time of publishing. This material is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Readers should seek professional advice for their individual circumstances.

This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 

Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.

This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.

All data contained within this document is sourced from Cazenove Capital unless otherwise stated.


Nick Paisner
Head of Editorial


The value of your investments and the income received from them can fall as well as rise. You may not get back the amount you invested.