When it’s time to sell… How to maximize your brand equity

Branding, Marketing

You’ve climbed the mountain. Reached the top. The pinnacle of your life’s work is under you. And now it’s time to cash in. Other than the obvious strong financials, what else is going to help you sell your financial planning business for top dollar?

According to industry publications, valuations for financial planning firms are reaching record highs, and private equity is more interested than ever in purchasing your business. Will you strike while the iron is hot?

There is a delicate art and science to mergers and acquisitions. However, all buyers have this in common: when it comes to buying a company, they want profitable businesses with strong brands. A strong, recognizable brand—one that commands client loyalty—will help ensure your exit from the firm has a limited impact on its continued success (which, equates to more money in the sale of your company).

Here are three rules to brand by now to get top dollar for your financial planning firm when you’re ready to sell:

  • A transferable brand.

You may have aspired to be the next JP Morgan, Charles Schwab or Dean Witter, and named your practice after the one-and-only-you on your pursuit to worldwide market domination. However, if you’re reading this, you likely fell short of those goals. In most cases, a financial planning company named after you implies to its clients that only you can lead it. Given the option, clients will always prefer to work with the namesake, which dilutes the value of your firm for a potential buyer. For that reason, naming a firm after yourself can be a challenge both in growing the firm, as well as in selling it down the road. Simply by naming it “John Smith Financial Services,” you’ve made yourself an integral piece of the company. This translates to “very expensive to replace” to a potential buyer, reducing the purchase price of your firm. If your company is currently named after you, and you have the mid-to-long term goals of selling the firm, consider a rebrand now. Give your firm the ability to stand on its own, and not solely as an extension of you.

  • A documented and branded process.

Whether its portfolio management or a financial planning process, if a process lives only in the owner’s head, it’s not tangible and therefore not sellable. A buyer may not have your charming personality that puts clients at ease, or the robust network of referral partners to keep a pipeline full. Documented, step-by-step processes are critical for the sale of your business. A buyer wouldn’t want to interrupt “what’s working” with a company they’re acquiring, and if they don’t know what “that” is, then they’re not buying it. Start with an SOP (standard operating procedure) for each critical area of your firm. Then, if it’s an external process, create collaborating branded materials to help communicate this process to clients and prospects. So, if it’s your investment style or planning process, name the process, lay out the steps and create marketing materials around it. If it’s an internal process, establish training materials or guidelines for a team to follow, and document clearly enough so they can do it without you in the picture.

Corroborating branded materials create a tangible good that can be passed from one owner to the next and used by all employees of the firm. Whether it’s your client onboarding process, annual review process, how to update the website or similar, a documented process is always a more valuable process.

  • Happy clients who are committed to the brand.

I once had a client who was so committed to their customer service experience that he delivered to his clients that he used to joke that they were tattooing his company name across their arms, as one brand lover might do for Harley Davidson or their favorite Looney Toon character. Happy clients are clients that are communicated with regularly. They’re brand ambassadors and can’t help themselves but to tell all their friends. Often advisors forget that their clients are someone else’s prospects, and without an established relationship between the client and the company, any future buyer of the firm would only be marginally better than a competing advisor. The value in an acquisition from a third party is largely based on the clients and assets that come with the firm, as well as their ability to duplicate such services to attract new ones. Invest in your client experience so they invest in your brand.

Do yourself the favor; whether or not you ever intend to sell your company—set it up as if you will. Brand equity is key! Each of these areas, if not structured correctly, can, at some point, create headaches and heartaches for the current owner, aka you. Done correctly, it will be easier to find and retain employees and clients alike, while ensuring a consistent brand experience across the board. After all, regardless of who owns the company, isn’t that really the foundation to a successful service-based business?

AdvisorPR has helped numerous financial planning companies on the buying and selling side of mergers and acquisitions throughout different geographic and economic markets. Considering purchasing a practice? Check out my blog, “When It’s Time to Buy…How to Maximize Your Acquisition.” If you’re eventually interested in participating in the transaction of a business, whether the buyer, merger or seller, keep us in mind as your marketing communications partner.

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