It is expected that more than half of all financial advisers in the UK today are expected to retire within the next 10 years. This means that hundreds of billions of funds under management (FUM) will have to move to a new advisor or financial organization, with a large number of transactions to take place.

These transactions will generally be either full or partial business sales, asset sales, or client book sales, and the buyers will be either commercial buyers (large and small), financial buyers, consolidators or executives. (i.e. management buyouts).

For owner-operators looking to retire, ways to achieve an exit include doing it yourself, working with a broker, engaging directly with a consolidator, or accessing an end-to-end estate solution.

Either way, thinking about the prospect of selling or retiring can bring a mix of emotions, from fear to excitement. There are many aspects to consider.

It is therefore essential that owner-managers are clear about what is important to them, such as people, customers, evaluation, timing, values ​​and what they are good at, as this will define their objectives and the best way to get there. .

Problems can arise if you try to do it yourself. Firstly, you may not have the connections or resources to access suitable financing and the terms, if available, may generally be impractical as the loan amounts are generally too low, or prohibitively expensive as the financing often requires a personal guarantee.

It is for these reasons that management buyouts can be difficult.

Second, while the owner-manager may be a very good financial advisor, he may not be an M&A expert. This presents an informational disadvantage in both identifying and negotiating with a sophisticated buyer, who are M&A experts.

An alternative to doing it yourself is to work with a specialist broker or corporate finance house who can help you through the process. But warning emptor! Transparency is key and you need to have a clear understanding of the rules of engagement and who the business advisor is working for.

Do they have both a “buyer” and a “seller” mandate? Do they take commissions from both sides? Do they work for a consolidator and therefore are most likely focused on that long-term relationship and not the one with the seller? If the answer is “yes”, then there is likely a conflict of interest.

If you engage with a consolidator, it’s important to recognize that they have their own goals, motivations, and processes that govern how they operate and who they do business with.

A consolidator, by definition, exists to consolidate FUM and revenue into its own products and platforms, is primarily vendor-focused, not staff or successor manager, and has acquisition transactions at the heart of its business model. Regardless of their positioning statements, there is an inherent incentive to transition FUM to their own products and platforms, which isn’t particularly appealing to those who value independence.

Whatever the option, the complexity of an agreement and the magnitude of the process cannot be underestimated. While there are several hurdles to jump through to get a deal done, it’s all about looking at your options and making sure the process is handled by someone who is aligned with you in terms of the outcome, and with a buyer who shares your values ​​and can support your goals.

Angus MacNee is Managing Director of Rimbal and ValidPath