Succession Link: An $850 Investment Leads a Financial Advisory Firm to a $500,000 Increase in Annual Revenues

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Sep 09, 2015, 08:30 ET

SAN DIEGO, Sept. 9, 2015 /PRNewswire/ -- When the managers of Gladstone Wealth Group[i] made the decision to expand their practice beyond their Central and Southern New Jersey offices, they began perusing the Internet for financial advisory firms listed for sale. That's when they came across Succession Link (www.successionlink.com), a networking and communications platform that connects advisors who want to buy, sell, or merge their practices. Additionally, some may be seeking continuity or want to join a practice.

By paying an annual membership fee of $850, Gladstone gained access to information provided by more than 2800 site members with an average of over $187 million AUM, and it provided a number of tools they used to identify and evaluate a practice. It also allowed them to communicate with unlimited members via a secure message center where all correspondence is categorized depending on the engagement, e.g. buyer, seller, merge, successor, etc. and saved for future reference.

According to Robert Hudson, President of Gladstone, "We felt the fee was a small price to pay as it provided us access to a marketplace that we otherwise wouldn't have known about."

Phillip Flakes, Co-Founder of Succession Link, explains that because they are a privately owned, non-affiliated firm, their offerings extend well beyond those most broker/dealers provide to their advisors who are planning their succession from business or looking to expand.

He continues, "Succession Link was intended as a gathering place for advisors who have an eye toward growing their business through acquisitions or mergers, or they may be planning to retire. We've created a number of tools and services that make the process much easier for both of them."

One innovative tool they have created is the Deal Terms Calculator, a program that pre-populates a form with the information provided by the selling member, e.g. gross revenue, number of clients and percentage of business that is fee-based. The prospective buyer then enters the desired term years and down payment to see if the practice is a viable consideration.

They also provide a listing of loan companies they have carefully vetted and approved according to their reputations and experience with giving loans to financial firms. Site members are able to apply for pre-approval to find out the maximum amount they will be able to finance.

DECISION TO BUY
Keith Brothers, Managing Director of Gladstone, says they reviewed a number of firms before deciding to purchase a practice in Boca Raton, Florida, one that represented a $500k increase in revenues annually.

He explains that while cost was a key factor, there were several other criteria they considered prior to purchasing the firm:

How are the revenues generated – were they commission or fee-based?
Who are the individuals currently running the business? What are their short-and long-term goals? How involved do they want to continue to be in the business, if at all?
What are the client demographics? What are their average ages and tenure with the firm? What are their investment styles? Who is their current custodial firm?

Brothers says they are pleased with the ease with which the acquisition transpired and feel the final result is a win/win for both parties. They also were impressed by the assistance they received from the Succession Link staff. "They were extremely responsive to all of our questions and concerns throughout the process," he adds.

With plans to continue their expansion efforts with the purchase of one or two advisory firms each year, he says they continue to monitor the Succession Link website (www.successionlink.com) on a regular basis to learn of new acquisition opportunities.

A FINAL WORD
Gladstone Wealth Group has created a growth model that works for them – acquisitions and recruitment. And, of course, finding the right firms to acquire is the first step to a successful acquisition.

According to Hudson, "Succession Link provides us with the connections, tools and resources that will enable us to reach our future goals. We consider them to be solid, long-term partners."

[i] Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Gladstone Institutional Advisory, a registered investment advisor. Gladstone Institutional Advisory and Gladstone Wealth Group are separate entities from LPL Financial.

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SOURCE Succession Link