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How to Sell to a Large Firm and Stay Happy

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ORLANDO, Fla. - Long-time owners thinking about selling to a larger firm: check your ego at the door.

“You need humility and you need to have an open mind,” Greg De Jong told advisors at TD Ameritrade’s annual conference for advisors.

De Jong, 56, should know. He started thinking about a succession plan for the advisory firm he owned, Paragon Advisors in Naperville, Ill., almost 10 years ago but couldn’t get it done.

Would-be successors left or didn’t materialize, and he started thinking about a sale or merger. Finding a similar-sized firm to his own $200 million practice seemed to be the logical next step.

But De Jong realized it wasn’t the right solution for him.

“I wanted to spend more time with clients,” De Jong recalled at the conference’s business planning session. “A merger of equals would have meant being saddled with more responsibilities.”


A colleague in the business suggested De Jong check out Savant Capital Management, a much larger firm with more than $4 billion in assets located about an hour away in Rockford, Ill.

De Jong liked what he saw and discussions began.

“We clicked right away, but no two firms do everything the same way,” he noted. “Everyone says they’re client-focused, but you have to really find out what that means to you and what it means to the other party.”

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And while firms considering a merger want to have more in common than not, De Jong told advisors not to be afraid if the firms aren’t carbon copies of each other.

“Some differences of culture can be invigorating,” he said. “It’s a marriage and hopefully you’re going to be together for a long time.”

When it came time to make a decision, De Jong said he had to take a deep breath, look in the mirror and ask himself if he could report to someone else after 18 years of calling the shots and running his own firm.

“I asked myself, what did I want to be doing in this phase of my career?” De Jong said.


He took the plunge, and sold his firm at the end of 2013 for equity, cash and a five-year note. Looking back, he has no regrets.

“I became an employee in 2014, but reported to people with a light touch, who didn’t feel the need to micromanage,” he recounted. “Are there some days I think I wouldn’t do certain things the way they do certain things? Sure. But that’s far outweighed by the upside.”

That upside includes doubling the amount of his new clients from his best year at Paragon in 2014 and tripling that number in 2015.

“My time was freed up,” De Jong said. “Savant had resources that we didn’t and could provide support for marketing, advertising, the website and referrals.”

There was also peace of mind.

Savant is considered one of the best run firms in the business and is growing rapidly, having made six acquisitions in the past three years.

“Paragon was my largest personal asset,” De Jong says. “Ideally I could sell it, but I knew from being a planner that there could be circumstances where the value of my equity could be greatly diminished. And if I had done a merger of equals I’m not sure how much of the equity would turn into cash. But I have no doubt when it’s time to leave Savant I will get paid out.”


But De Jong has no plans to leave anytime soon. He’s enjoying working with clients and mentoring younger advisors at the firm.

That appealed to Savant says Brent Brodeski, the firm’s chief executive.

“We were intrigued by the fact that Greg didn’t want to go away,’ Brodeski said. “We know the best way to grow a business is to grow advisors, and we can hire all the best young people we want, but they need a gray-haired mentor. Greg has turned out to be a poster child for us.”


De Jong had a final piece of advice for owners of smaller firms thinking of following a similar path: don’t obsess over the negotiations.

Paragon was valued at a multiple of EBIDTA normalized for owner’s expenses, Brodeski said. The multiple was determined by expected growth and expected risk: the lower the risk and the probability that clients would leave, the higher the multiple.

“I didn’t obsess over it,” De Jong said. “Savant is a smart firm and I figured they did not want to try and slip something by me and have a disenchanted Greg De Jong working for them.”

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