workshop for planners retiring

Workshop for planners retiring or leaving the

industry

Principal – John BirtSydney Associate – Patrick Walford www.radarresults.com.au

Radar Results provide advice in respect to

valuations, appraisals, marketing and analysis

of acquisition targets.

Radar provides a private and confidential service.

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Why hold these workshops?

On 26th April 2010 and the 6th December 2010

Radar asked financial planners the question

“How will Chris Bowen’s new laws (July

2012) affect your business plans?”.

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Answer Number of Responses Response Ratio

Retire Sooner 94 13%

Sell part or all of your business 102 13%

Expand through acquisition 108 14%

Leave the planning industry 121 16%

No change at all 333 44%

Totals 758 100%

April 2010 survey outcome

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Answer Number of Responses Response Ratio

Change Careers 11 2.8%

Retire Sooner 57 14%

Sell part of your business38

9.4%

Sell all of your business 18 4.5%

Expand through acquisition 42 10.3%

Go to a larger dealer group

8 1.9%

No Change 172 42.2%

Other or no response 61 14.9%

Totals 407 100%

December 2010 survey outcome

Topics to be discussed today.. Valuing a financial planning business What a vendor (seller) needs to provide? Key areas that need to be negotiated What can stop a sale? Due diligence Independent advice

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Valuing a financial planning business

Recurring revenue – multiple between 2x and 3x Total revenue – multiple of 1.5x and 2x EBIT (profit) – multiple of 4x up to 8x (rev $2M+) Formal valuation service or free appraisal service

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What does a vendor need to provide?

Client list (no names) age, suburb, acc balance, platform Revenue documents Initial fact find (see handout) Lease agreements Compliance reports AR agreement Financials Letter of authority to transfer/release clients

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Key areas that need negotiation

Price Terms – instalments or 100% upfront payment Claw-backs – 10% to 30% usually Rise and fall – based on market or loss of clients? Restraint of trade – non compete for clients sold Definition of recurring revenue, no upfront, no vol bonus

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What can stop a sale? Product mix discovery during due diligence Finance not being approved Company “must” be purchased Employment of staff Taking over a lease Vendor’s post sale salary expectation Lack of client transition work

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Due diligence Commission/revenue reports Client files Company search Compliance report Financials AR agreement Complaints register

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Independent advice

Legal advice for contract of sale agreements Legal advice on transfer of business name Legal advice on transfer of lease Accountancy advice on CGT, stamp duty, GST Due diligence work and reports

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