Providing professional guidance in a challenging market environment, SRG secures favorable deal terms for the $91M AUM practice
Portland, OR – September 14, 2023 – Succession Resource Group (SRG) is pleased to announce it has facilitated the successful sale of a well-established financial advisory firm. The transaction was completed September 2023, following an 11-month process. Due to the ongoing transition, the parties have requested that their names not be disclosed.
About the Transaction
The seller, an experienced financial advisor, engaged SRG October 2022, after facing challenges in a previous private deal attempt. Initially, the seller attempted to sell his practice to a friend and local advisor, but the process was complicated by a significant market correction in June 2022, when the S&P 500 fell nearly 20%. The decline in revenue led the buyer to seek adjustments to the purchase agreement, causing the seller to question whether they were getting the best price and terms. Frustrated by the self-negotiation process, the seller turned to SRG for advocated support.
SRG provided the seller with comprehensive valuation services and a well-refined process, ultimately facilitating a successful sale of the $91.74 million AUM practice, which boasts 98.42% recurring revenue and serves 146 households. The transaction also included the retention of a highly compensated administrative employee, ensuring continuity of service for clients.
Market and Offer Highlights
The sale attracted significant interest from potential buyers, with 87 parties expressing interest in the opportunity. After careful vetting, SRG presented the seller with eight elite buyers, resulting in three formal offers. While none of the offers exceeded the $2.9 million asking price, all offers included down payments of 80% or higher, with two out of three offers offering over 95% long-term capital gains tax treatment. The final deal, which was accepted, provided a 3.82x multiple on recurring revenue, along with a 90% non-refundable cash down payment plus staff expenses—significantly more favorable terms than a previous deal the seller had considered, which offered a 3.19x multiple and a 60% non-refundable cash down payment.
Kristen Grau, Director of the Seller Advocacy Program at SRG, shared her thoughts on the transaction: “This transaction underscores the importance of professional guidance in achieving the best possible outcome, especially in a challenging market environment. The seller’s decision to engage with SRG after a previous deal fell through allowed us to leverage our expertise and market insights to secure terms that far exceeded the seller’s expectations. We’re proud to have been able to provide the support they needed to retire with confidence, knowing their clients will be well cared for.”
