Current Deal Structure Landscape – Equity Ownership Options for the Next Generation-Session recording

Video Transcription

Video Summary

In this video, Marcus Haygood discusses the current market for financial advisory firms and the different paths to succession. He explains that the most common path for younger advisors is through internal succession, where they gradually buy into the business over time. This usually involves multiple tranches of sales, with the younger advisor progressively owning more of the business. Haygood emphasizes the importance of having a written succession plan and setting goals and timelines for the transition. He also highlights the need for continuity planning in case of an unexpected event, such as the owner passing away. Haygood suggests that younger advisors could offer to be a continuity partner for the business, providing a solution if something were to happen to the owner. He concludes by discussing the value drivers in the industry, such as revenue size, predictability, and growth, and advises younger advisors to consider an income approach to valuation when buying into a business. He also touches on the trend of large aggregators buying up smaller firms and the benefits of increased capabilities for clients. Overall, Haygood stresses the importance of planning for succession and finding the right path for next generational advisors to buy into the business.

Keywords

financial advisory firms

succession planning

internal succession

buying into the business

tranches of sales

written succession plan

continuity planning

value drivers

income approach to valuation

large aggregators