Advice practice owners urged not to wait to sell their businesses
The pool of potential buyers of advice practices is the largest in many years, and practice owners should not base their succession planning on whether markets and politicians will come around, according to Connect Financial Service Brokers chief executive, Paul Tynan.
In a statement, Mr Tynan said sellers should instead plan their exit around "a balance of business, health, financial and lifestyle to suit their individual circumstances and then take into account current market conditions and review their valuation expectations accordingly".
Mr Tynan added that many buyers seeking an advice practice are aged between 40 and 50 and are looking to "buy a job".
"They have been downsized or don't like the new institutional world, have been transferred out of an area or have decided they want to be their own boss in charge of their future professional/career destiny," he said.
As a result of the undersupply due to owners waiting for the environment to change, buyers are becoming more frustrated and this may lead to the wrong purchase being made, Mr Tynan said.
"The history of the Australian financial service industry is quite literally littered with terrible acquisitions and mergers," he said.
"Prospective buyers of practices need to be patient and not be 'spooked' into making inappropriate acquisitions that have the potential to be long-term catastrophic financial decisions."
In addition, Mr Tynan said it is possible for retirement plans to be taken out of the hands of many individuals due to deteriorating personal health, death, bankruptcy, divorce and more.
"A seller will never get the perfect business environment to execute their retirement and exit plans. In fact, if you are waiting for the economy to move into growth mode or for the government to pass the FOFA legislation – forget it."
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