Should I Stay Or Should I Go Now?

It seems many advisers are waking up with that song in their head.  After over 50 conversations with advisers who have previously noted their interest in practice sales/purchases, Jason Shepherd shares some takeaways - we also include the current Adviser Ratings Landscape Report commentary on practice sales promised as in some of the discussions.

“In short, our recent conversations across Australia unsurprisingly reveal many advisers are looking to move ‘soon’.  Many are are waiting out the next month or two or are using this time to prepare but believe they will likely go – often reluctantly.  Administrative frustrations, higher costs, insurance and change of ultimate licensee ownership are leading many to seriously consider hanging out a “for sale” sign.  But most enjoy their role in providing advice and will miss doing this if they leave.  Also, strong buyers are queuing up now with many wanting to be on the interested purchaser list.

Since we started our practice brokering and partner search business with Practice Exchange we have spoken to many advisers interested in succession transactions.  We started by reaching out to the c.17% of respondents to last year’s annual adviser survey who noted an interest in buying or selling.

After assessing the survey’s results and contacting more than half the respondents we can report the clear message is “I am not sure what I am going to be doing but I know it’s not what I am doing now – it’s grow or exit even if I join another group”.

We have had great, wide-ranging discussions with the following themes emerging:

1. Many have never been busier as a result of the impact of an initial Covid hit on asset values, wealth impacts from employment risk and the front-of-mind issues playing out in the news daily of morbidity and mortality.
2. Some licensee fees are more than doubling, forcing otherwise happy advisers with happy, well serviced clients to consider moving;
3. Timing.  The extension of deadlines for FASEA requirements meant that some who were planning to exit this year have put off actions given a desire to sell in a less disrupted world.  My personal take is Hayne, bushfires and Covid have deferred not only marriages, major professional moves, property upsizing and key life decisions (ie pregnancies – there are some interesting stats around on a Covid “baby bust”) but also practice sales even for those planning to do so.  It leads me to wonder - will this drive a possible practice sale glut mid next year?;
4. On the buy-side there are many advisers and practices looking for opportunities with multiples of revenues for the right business at the mid to higher end of the 2 to 3 times range for the right practice (we firmly believe only a considered offering to multiple well-resourced buyers can secure the best price);
5. Sell-and-stay. Both buyers and sellers are open to structured sales where the outgoing adviser is actively engaged in aspects of customer management over the traditional exit period rather than just on a handover basis. This is an operating model attractive to some who had planned to leave in several years, not one.

Several advisers enjoyed discussing the market for sales generally.  As such we thought we would share the “Trading Places” section of the last Adviser Ratings Annual Financial Landscape Report (2019).

Please reach out to Jason to discuss any plans or thoughts on change of control confidentially and without obligation on 0411 427 176 or jason@adviserratings.com.au.  Feel free to visit our prosite for more practice broking information 

Article by:

Jason Shepherd

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