SALT LAKE CITY -- Nancy Nelson never planned on selling her practice.

"I thought my clients would gradually die, I wouldn't take their kids and my practice would just go down and down," the Olympia, Wash., planner told a crowded room at NAPFA's annual conference.

Two things changed Nelson's thinking, she told listeners during a panel on selling a solo firm: She watched a friend sell her solo practice for a lot of money. Then, practically overnight, she wanted out herself.


"I was saying, 'I love what I do. I love what I do, and I love what I do,' and then I just burned out," Nelson recalled. "Compliance drove me up the wall and I stopped reading so many publications. I became aware of my mortality -- there were other things I wanted to do with my life."

Moreover, she no longer wanted to see all she had created die at her retirement.

"I was really proud of the practice I had built," Nelson said. "I didn't want it to just wither away."

Fellow panelist William Bengen sold his Chula Vista, Calif., practice relatively quickly last year after a different epiphany: He decided he wanted to spend more time with his grandson.

The third panelist, Mary Dean, was in the midst of a 10-year process of selling her firm to junior advisors when she got a call from Bengen, asking if she might want to buy his. She did.

Dean shared what she is doing now to continue the ongoing process of transferring her life's work and all her clients to planners she said she trusts to provide precisely the same -- or better -- level of service.

The panelists explained how they navigated the painstaking process of selling their solo firms.


Here are 23 of their recommendations for how to do it right and command the maximum purchase price.

1. You are transferring trust, not just a business. Bengen said he kept this idea foremost in his thoughts during the process.

2. If you are an overworked sole practitioner, turn your practice into a business. No buyers want to purchase a job. Among other things, Nelson brought in a junior planner to lighten her load and get her practice humming. "If I'd done these things before, I might have just kept working because they made it more enjoyable to be there," she said.

3. Don't assume someone in your office can succeed you. "An employee can be a great planner but not necessarily have what it takes to run a practice," said Nelson, who had wanted to transfer internally but sold to an outside buyer.

4. Don't just hand off the company to a buyer. You risk losing all your clients and reducing the value of the sale, which likely will pay out over a number of years based on retained revenue.

5. Give or sell clients who produce low revenues to a different planner. A number of Nelson's oldest clients' assets had dwindled to the point where they produced little income. She knew of a former planner she respected who was getting back into the business and could take them. This raised average revenue for Nelson's remaining clients.

6. Use a third-party marketing firm, like FP Transitions. "They should be able to provide you with a good pool of advisors that are pre-qualified," Bengen said. When choosing a firm, he said, it "should also have a well-developed process. Its people should all be very experienced in the field and excellent negotiators."

7. Ask custodians for help. All three tapped or investigated some of their custodians' services for transitioning advisors, although all found that their lists of potential buyers included fee-based or commission-based planners whose cultures did not mesh with their own.

8. Use a coach to keep you focused on your goals. "She said, 'Yes, you've worked years for this, and, yes, it's worth what you are asking,'" Nelson said of her coach.

9. Raise your fees. "My fees were below market," Nelson said. "I had set them years ago and simply got out of touch. One prospective buyer said it was a potential deal breaker, so I raised my fees a few months before I sold."

10. Incentivize employees to stay put. Nelson arranged for bonus payments to her employees if they committed to staying in their jobs for a year after the sale.

11. Keep in mind that the terms of your sale may change, depending on the success of the business in its first years after or during the transition. The terms of Nelson's sale stipulated that "if the buyer hasn't received at least 90% of the revenue they expected in the first year, then they could adjust the face value of the note to 85% of what it had been."Nelson also said she knows another planner who arranged to receive a greater sum if revenue exceeded expectations.

12. Simplify your investments. "I cleaned up a lot of non-standard investments," Bengen said. He moved his clients out of gold and individual stocks and into a short roster of mutual funds so that the new owners could more easily transfer client assets into new investments.

13. Stay in touch with clients before, during and after the sale. Bengen said he set aside 30 minutes to an hour to speak with each of his 80 clients. Even after the practice had moved, the new owners gave Bengen a temporary office where he could meet on a daily basis with clients to discuss their concerns about the sale.

14. Work off a script. Bengen prepared a script that he customized to use with each client. 

15. Be prepared for your clients' emotions.  "I had to leave room in my script for gasps and tears and threats," Bengen said. "I think the fact that I went to the trouble of contacting them directly was really appreciated and smoothed out the subsequent road."

16. Be prepared for your own emotions as well. "By nature I'm a pretty emotional individual," Bengen said. "This was a very emotional time for me. I lost weight. I didn't eat. I had a lot of doubts. I was concerned about how my clients would react."

17. Fire undesirable clients. Nelson was frank with her prospective buyer, telling him about an elderly client with two mentally ill children who was nearing the end of life."I could see where, down the line, they could potentially sue," Nelson said, "and he said it was a lawsuit in the making." She fired the clients before the sale.

18. Prepare to sell fast ... "Be ready, based on either a desire or a health-related need, to exit very quickly," Nelson said.

19. ... or very slowly. Dean said it took her 10 years to find the right buyer, who ended up being a fellow member of her NAPFA study group.

20. Ask prospective buyers about timing. "Is this person just kicking the tires, or are they expecting a grandchild in August and hot to trot?" Nelson asks.

21. Know your buyer well. Beware of flippers, Nelson said; she found some buyers were looking to acquire books of business only to then resell them at a higher price. "They were accumulating firms like kids getting candy at Halloween," Dean said. "Just grabbing firms right and left, and I didn't want to have my clients with them."

22. Consider selling your practice in multiple transactions. A planner Bengen knows chose to sell pieces of his business to different planners around the country, creating separate deals for clusters of his clients.

23. Make sure you can live with yourself afterward. "You make a lot of decisions for your clients over the years. This is the last one you are going to make, and you don't want it coming back to you," said Bengen. When he isn't spending time with his grandson -- the first boy born in his family since his own birth -- he plans to study languages and learn to play the piano. "I feel wonderful about what happened."

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