Succession Link Provides "Deal Terms Calculator" for Advisors Wanting to Purchase a Financial Advisory Practice

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Sep 23, 2014, 10:08 ET

SAN DIEGO, Sept. 23, 2014 /PRNewswire/ -- Succession Link, an online marketplace for advisors who want to buy, sell or merge their practices, announced the release of its Deal Terms Calculator, created as an extension of the Business Valuation Tool. The Calculator provides potential buyers of advisory practices with a realistic estimate of what the down payment might be, along with minimum/maximum amounts, and an estimated buyout price, based on the criteria of the selling practice and terms of the deal.

According to Phillip Flakes, co-founder of Succession Link, "When using the Calculator, a buyer can see if the cost is within the ballpark of their ability to pay or finance and was designed to set a range of expectations for the user."

The methodology behind the Calculator is based on valuation research[1] obtained from just over 200 financial advisory practices that have been sold. Furthermore the calculator uses a unique valuation methodology that is derived from a hybrid of three commonly used methods to determine practice value; the market multiplier approach, the asset-based approach, and the comparable transactions approach. To use the Calculator, the user must enter practice details including:

Gross revenue of the firm
AUM for sale
Number of clients
Average client age
Percentage of fee-based business

After entering the criteria, the user then must select the terms of the buyout (1-10 years). In most cases, the length of the deal is a key determinate for what the down payment will be.

For buyers and sellers of advisory firms, there are often tradeoffs between time and price. For example, if a seller receives less money up front, and if the time to complete the full payment is longer, he or she receives more in total. On the other hand, a buyer who pays less up front (a smaller down payment) will pay more if the terms are longer.

Flakes stresses that the tool was created to provide users with an idea of what to expect as terms vary. "It's a good idea for buyers and sellers to jointly consider the term years and the down payment of the deal in addition the total amount of the sale."

While the Deal Terms Calculator can help set expectations for buyers, the seller might have completely different terms in mind. "However, it's a starting point for negotiation," he adds.

Unlimited access to the Deal Terms Calculator is part of the Annual Subscriber package offered by Succession Link. For more information about the tools and services included in the buyer's package, go to www.successionlink.com/pricing.

About Succession Link
Succession Link is an online marketplace for financial advisors who want to buy, sell or merge their practices. It also offers assistance with the transaction process and provides an innovative business valuation tool. Succession Link's service is unique in that no fee is charged to selling advisors, and buyers only pay a minimal subscription fee. Succession Link was founded by a group of leading financial professionals who have spent their careers working with advisors. [www.successionlink.com]

[1] Success Link: Business Valuation Research, April 2014.

Succession Link
(800) 397-0430
[email protected]
www.successionlink.com

SOURCE Succession Link