The Majority Of Advisors Have No Real Sense Of What Their Firms Are Worth
- Created: Friday, 24 February 2012 12:26
Investment News recently ran a survey and found out that 74% of the advisors they talked to have not had a third-party auditor determine exactly what their businesses are worth.
That's understandable given the informal benchmarks that have gotten popular in the industry: so many times AUM, so many times recurring revenue, and so on.
Probably every advisor could come up with a rough ballpark number for how much his or her business is worth.
But it raises the question of why they haven't gotten a formal dollar estimate. Are they too busy? Not willing to spend money on a third-party appraisal?
It strikes me that the firmer the number advisors have to work with, the better they can plan, grow, and make their businesses more valuable.
And in the short term, the estimated worth of the business plays into questions of insurance coverage and yes, the succession plan. Does the firm have the right amount of key person coverage? How much exactly will it need help prospective buyers finance the transition when the time comes?
This Website Is For Financial Professionals Only
- Succession Link, A New Listing Service For Advisors Who Want to Sell Firms, Debuts
- RIA Consolidator Beacon Pointe Announces Deal With $100 Million AUM RIA And Is Looking For 40 More RIAs
- Like Doctors, Advisors Don't Take Their Own Medicine When It Comes To Succession Planning Advice
- Creating A Wealth Management Firm That Will Be Highly Valued When You Are Ready To Sell