Our team are often approached by firms who are either interested in exploring the potential of selling their practice and conversely what is involved in purchasing a practice. We do work with a firm who can connect IFA’s wanting to sell to those wanting to buy but before that stage, a good insight into the whole process is vital to avoid any unforeseen challenges.
One of those challenges can be with the due diligence process.

Due Diligence Process
Due diligence will cover a period as far back as the business has been trading and can cover some or all of the following areas: –
- Management Structure and Controls
- Board Minutes
- Quality and consistency of Management Information
- Client Facing Advisers
- Quality of Business Written – File Checks
- High risk Business Written and criteria for checking
- Policies and Procedures
- Business Registers
- Complaints
- Breaches
- Outcomes of contact with the regulator
- Client numbers
- Assests under Management and recurring income
- All fee structures used
- Centralised Investment Process
- Staffing levels and roles
- Details of PII cover
As you can imagine this can take a significant period of time, some of the above is outsourced which can also delay. Therefore, allowing a realistic timescale is essential as this wont and can’t be rushed.
This may all sound extremely daunting, but this is where we can come in. We can help you prepare and work towards selling your business or conversely, assist as part of the due diligence team if you are thinking of purchasing a practice.
Valuation of the Business
This is normally agreed at outset, it can be based on EBITDA – Earnings before interest, tax, depreciation and amortization, which is effectively operating profit. Typically ranges of 6-8 times is common, other methods are: –
2-3 times multiple of the recurring fee income, excluding trail income.
1.5%-2% of the assets under management
Compliance Support
If you are thinking of selling your business our advice would be to start having the discussions early on, this is a long and very involved process. We can support you and give a view on areas of the business that may be an issue.
We can sample files against your policies and procedures, give you honest feedback especially the higher risk areas such as Defined Benefit advice.