Finance a problem for advisers looking to sell

Advisers wanting to sell their practice are increasingly looking towards vendor finance as traditional lenders raise their minimum loan requirement, according to a financial planning M&A consultant.

According to Radar Results principal John Birt, advisers seeking to sell their practice are considering vendor finance as an alternative should they find it difficult to attract a suitable buyer who needs traditional finance.

“While not ideal for many sellers, it can provide the solution to receiving the capital over an agreed period and at a reasonable interest rate on the deferred payments,” Mr Birt said.

Additionally, he noted that traditional lenders to financial planners and accountants have raised their minimum loan requirement.


“The big four banks are now asking for any approved loan to be at least $1 million, which has stopped financial planners and accountants from expanding,” Mr Birt said.

“It has caused several non-traditional lenders to surface to accommodate loans of between $250,000 and $500,000 by merely using the equity in the business they are buying.

“Naturally, interest rates are higher due to the lender taking on a higher risk.”

Finance a problem for advisers looking to sell
John Birt
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Adrian Flores

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].

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