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Your firm’s transition planning journey
What financial advisers should consider when transition planning
Transitioning from your business is a significant decision that involves a complex and lengthy process. We understand that each firm is unique, so here we provide an overview of the key steps involved in your transition.
For further guidance, please refer to our Profitable Practices guide on succession planning.
The key steps in transition planning
Step one: Decide on a timeline
- 6-18 months for a speedier exit.
- 2-3 years for a smoother transition.
- 5-10 years for more complex situations.
- Indefinite for phasing out without a specific deadline.
- Speak to others who’ve been through this process before.
Step two: Identify potential successors or buyers
- Successors may include family members in a family-run business or existing partners – the next generation ready to step up.
- Buyers may include firms in similar areas looking to grow, consolidators, private equity, even employee ownership models.
- Evaluate successor and buyer options for their financial strength and stability, strategic alignment, client fit and continuity of service.
Step three: Gather important information
- Find out the value of your business, by consulting a business valuation firm or using common valuation methods – Revenue/EBITDA multiples or Discounted Cash Flow (DCF). Benchmark against competitors and industry averages.
- If you haven’t already, segment your clients by growth potential, service required and specific behaviour, to give potential successors or buyers a clear picture of the client make-up and any opportunities or watchouts.
Step four: Align your business
- Make sure your business accounts are in good order.
- Engage and align with your successor(s)/buyer(s).
- Finalise any succession agreements.
- Make sure your employees are aware of any plans.
- Share your knowledge of key clients and accounts with relevant teams.
- If not already done, document processes for a smooth handover.
Step five: Plan your communications and introductions
- Decide how to best communicate the changes to clients. Focus on what they need to know and when, and how you’ll deliver the news.
- Help to build trust in new successor(s) by introducing them early to clients.
Step six: Prepare to step back
- Emotionally prepare yourself – your business has been a big part of your life.
- Set new goals – think about what you would like to achieve now you’re not tied to work.
- Thank your colleagues and clients, especially those you’ve built a strong relationship with.
- Maintain relationships where you’d like to.
- Start dialling back your involvement, while being on hand to help with any initial queries or concerns.
Step seven: Take your time on your last day
- Enjoy your next steps, whether it’s a new venture or fresh adventure.
Points to remember
The more prepared you are, the easier the transition will be when you move on from work. It’ll also help your clients and colleagues adjust at a reasonable pace, and catch up on any knowledge they’ll need. This is your chance to leave a wonderful legacy.
Our goal is to help firms like yours build strong, profitable and sustainable businesses, while supporting you through any challenges that may arise. That’s why we’ve curated our Profitable Practices series.
For more help and support, take a look at the rest of the series and discover other areas that could help you drive greater profitability for your practice: