A guide to selling your financial advice business

2 3

Are you ready to sell?

Retiring or moving on to a new venture after years

of running your own business is a momentous event

and there are several factors to consider before

reaching the decision to sell. Understanding the

process and choosing the right partner to look after

your clients is crucial to achieving the best outcome,

and one of the biggest concerns for sellers is that

their clients are taken care of and the advice they

have given is protected moving forward.

Before you can begin the process, you will need

to consider:

• when you would like to sell

• the potential value of your business

• the type of service you would like for your clients

moving forward (one way to look at this, is as the last

recommendation you will make to your client)

• whether all of the business owners are aligned with

the decision to sell

• what will happen to your employees.

Types of saleYou will need to decide the type of sale that is

appropriate for your business. The majority of people

sell either because they are retiring or they have

decided that running a small IFA Firm is best done

as part of a larger group in the current regulatory

environment.

Retirement SaleThis is where you, the vendor, will sell your business,

complete the client handovers and then retire from the

business and the industry. The office will most likely be

closed and the employees of the business will either

transfer to the buyer, retire or leave the business.

Enterprise Appointed RepresentativeThis is where, as the vendor, you may want to work

on for a few years but have decided that you no

longer wish to own and run a directly regulated IFA

Firm with all the responsibilities and risks that go

with that. This type of acquisition is where the buyer

acquires the business however, some of the vendors

stay on to continue to grow the business, potentially

retaining the office, existing team and brand. The

firm is appointed as an Appointed Represented of the

directly regulated Principal firm.

Asset purchase

In an asset purchase, the clients and income assets

of your business are transferred to the buyer. If your

business is a limited company, the buyer does not buy

the share capital. In this scenario, the transaction is

between your business and the buyer, so you will still

own the limited company but it will have no clients.

You can then apply to Companies House to close the

company. If you are a sole trader or partnership, you

may be able to benefit from Entrepreneurs’ Relief. Due

to the nature of this type of sale, certain elements

of the buyer’s due diligence process are scaled down.

Asset purchase is generally preferred by buyers.

Share purchase

A share purchase is a transaction between you, the

shareholder and the buyer. This means selling the

business legal entity, the limited company, including all

its assets and liabilities. Generally all of the shares in the

business are transferred to the buyer.

Entrepreneur’s Relief can potentially apply when selling

shares so a share purchase could potentially be more tax

efficient.

A share purchase generally takes longer to complete

than an asset purchase due to the level of due

diligence and the negotiation required for warranties,

guarantees, and indemnities. As such, professional fees

are generally more expensive for a share purchase.

BuyersOnce you have decided which type of sale is appropriate,

you will be in a position to think about the type of buyer

you are looking for. At this stage, it is worth considering

whether the potential purchasing firm:

• offers an independent or restricted advice

proposition

• is Chartered

• is an Occupational Pension Specialist

• is client focused

• has an established client engagement process

• is sufficiently resourced and well run

• is well capitalised

• is privately owned, listed, or a private equity firm

• is solely a financial planning business.

Preparing your records The next step is making sure your records are available

and up to date including:

• client files

• income and client asset records

• employment, premises, technology, and financing

contracts

• accounts

• company articles

• FCA Retail Mediation Activities Return (RMAR)

4 5• Professional Indemnity renewals

• any potential issues such as high-risk products and

complaints.

You will need to ensure that client files are scanned and

that your client database is exportable, for example in a

spreadsheet, as your buyer will need contact and policy

details for all your clients.

If you are an Appointed Representative, you may need

to obtain data from the Principal so it is prudent at this

stage to check the agreement which sets out your rights.

You will also need to be able to demonstrate compliance

with regulatory requirements and data protection

legislation. It is worth preparing your records as early as

possible to ease the process further down the line.

Professional advisersYou should seek legal and tax advice and it is best

to engage advisers early in the process. Another

consideration is whether you want a broker to represent

you and their fees tend to range between 1-5% of the

deal consideration. It is increasingly common for sellers

to approach buyers directly, so you may not feel it

necessary to use a broker.

TimescalesThere is no guaranteed timescale for selling, particularly

as most buyers will tailor their approach to your

individual business and it can be a time-consuming

process. A general guideline could be anything between

two months and a year, and planning an exit further in

advance of this is not uncommon.

Valuation and offersBuyers will look at numerous aspects when valuing

your business including cashflow, profits, and staffing

arrangements. There are several different methods to

calculate the valuation including:

• a multiple of recurring income

• % of funds under management that generate

recurring income

• a multiple of EBITDA (Earnings Before Interest, Tax,

Depreciation and Amortisation).

It is sensible to consider more than one offer to ensure

you achieve the best deal, not only financially but

when it comes to the future of your business and

looking after your clients (and staff if applicable).

Stuart Harding Financial Planning DirectorDaniel Bridges Chief Technology Officer

7

Ian Plumpton Compliance and Operations Director

6 TaxThe tax implications of selling your business can be

significant and it it important to take tax advice.

Entrepreneurs’ Relief is generally available, depending

on the sale structure and the key tax to be aware of is

Capital Gains Tax which is due on the gains from the

sale of your business.

Due diligence Once you have agreed a deal in principle with your

buyer, they will carry out due diligence on your

business, but you should also carry out due diligence

on them to ensure they are a suitable fit for your

business and your clients. It is also prudent to check

their financial stability, growth strategy, and regulatory

and complaints history.

Your buyer will carry out due diligence on every aspect

of your business including finances, tax, regulation,

and its day-to-day operations so you will need to

supply information on:

accounts

corporate structure

client demographics and service propositions

fee structures

agencies

income and assets

complaints

compliance

technology and back office systems

staffing and premises if applicable.

Due diligence for a share purchase is more detailed

than for an asset purchase because of the extra

liability involved, so the process will take longer

(typically 4-12 weeks).

Alongside the due diligence process, the contract will

be prepared by your buyer’s lawyers for your lawyers

to review.

FCA Change in Control and Cancellation of PermissionsIf your business is directly regulated, either a change

in control or de-authorisation and appointment as an

Appointed Representative is required when you sell

your business, depending on the sale structure. It can

take up to 90 working days for the FCA to complete a

change of control and the application process normally

happens during the due diligence stage.

You will also need to have a complaints process in place

for prior advice as generally buyers will not assume

liability so you will remain responsible following the

sale. Your buyer will expect you to hold Professional

Indemnity insurance run-off cover in respect of your

previous advice and activities, typically for two years.

Payment structureNaturally, payment is a fundamental part of the

transaction. A typical structure is a payment

on completion, and on the first two completion

anniversary dates.

Client migrationOnce the deal reaches completion, you will need to

migrate your clients. This can be done with a Letter

of Authority or by novation for each provider. If you

have not already communicated this to them, your

clients will need to be made aware of the sale and

agree to transfer to the buying firm. Typically, your

buyer will work with you to produce a letter from

you explaining the change, and another from them

welcoming your clients.

8 9In order to value your business, we will look at:

• ongoing charging structure

• average client size

• total assets under management

• client demographics

• product and platform choice

• service proposition

• legacy client bank

• number of private and corporate clients

• corporate status and structure

• authorisation and permissions

• client file format

• legacy advice risks.

Should you decide to sell your business to us, we will

work with you to ensure a smooth transition for both

you and your clients, acting with integrity and respect

for you, your business, and your clients at all times.

Working together, we will achieve a successful

transaction so that you can exit your business safe

in the knowledge that your valued clients will be well

taken care of and you will be suitably rewarded for the

business you have built over many years.

Choosing the right partner

At Attivo Group we understand how important it is

to find a company that has high standards of service

and will put your clients first.

Why partner with us? Our growth strategy is through the acquisition of

independent financial advice companies and having

successfully acquired over 30 IFA businesses in the

last decade, our acquisition process has been well

honed to ensure the smoothest handover for you

and your clients.

We consider both asset purchase and share purchase

arrangements and the corporate structure of your

business can be a limited company, partnership, or

sole trader. We will offer a realistic, fair and equitable

price for your business, treating all opportunities with

confidentiality and sensitivity.

We regularly monitor the ongoing appropriateness of

our acquisition process to ensure we remain working

in the best interest of clients, and in compliance with

legal and regulatory parameters.

“Attivo Group is well-structured for the

acquisition process. They made direct

contact with my back office system and

offered to do whatever they could so

that I could continue with client work

throughout the process.”

Retired adviser

Katie White Chartered Financial Planner

10 11Attivo Group’s financial planning company, Attivo

Financial Planning was founded by Stephen Harper

in 1998. We are a privately owned, Independent,

Chartered Financial Planning and Occupational

Pension Specialist company, specialising in

giving financial planning advice to private and

corporate clients.

We have a dedicated Trainee Financial Planners who will

welcome your clients to Attivo Financial Planning and

be on hand to look after them on an ongoing basis.

Our highly qualified Financial Planners and

Paraplanners, many of whom are qualified to Fellow

and Chartered status, will then get to know your

clients’ circumstances and help them achieve their

financial objectives.

We are proud that most clients who come to us

through acquisition choose to stay with us.

“I am in no doubt my clients are in

the hands of people who genuinely

care about how they will feel. Attivo

Financial Planning confirmed my early

positive impression and of the company

throughout the process and that

mattered to me.”

Retired adviser

Introducing Attivo Financial Planning

Attivo Financial Planning

• Genuinely independent

• Chartered status

• Occupational Pension Specialist

• Privately owned

• Client focused

• Experienced, knowledgeable, and

dedicated Acquisitions Team

1312

Our acquisition process

1 25 64

The first step of the process is for us to understand your initial thoughts on exiting your business, so we will usually set up a telephone call to discuss the type of sale you are considering, and the timescales you would like to work towards.

With most of our acquisitions, retiring advisers prefer to completely handover and exit from the business but another option you may wish to consider is selling the shares of your business to us and joining us as an adviser.

This allows you to continue advising clients but without the legislative and regulatory burden that comes with owning your own business.

At this stage we will carry out a comprehensive legal, financial and compliance due diligence review of your business which will typically take 4-12 weeks.

Due diligence

Our lawyers will then draw up a contract for your lawyer to review and provide any comments. This can be an iterative process but should not take longer than a month to agree.

At this point we will devise a client integration plan including the content and timing of client communications, your desired level of involvement, and a timeframe for us to meet with your clients.

Integration preparation Before we proceed to exchange, we will need a complete client list including contact and policy details so that initial data migration can take place.

Sale and purchase agreement

If you decide you are ready to sell, we will conduct a preliminary due diligence assessment, after which we will discuss a fair and equitable price for your business and make you a formal offer.

Should you wish to proceed, we will enter into Heads of Terms, setting out the key terms of the deal, including an exclusivity period.

Qualification and indicative valuation

Completion typically takes place three months from the date of exchange but can be quicker subject to FCA approval. At this point we will begin the novation process for each provider.

PaymentOur standard payment terms are either two or three payments over a 24 month period: the first on completion, with typically remaining payments to be made over 2-4 years.

Keeping you informedWe know that exiting your business is a big decision so we stay in regular contact with you before, during, and after the sale. We will schedule in quarterly review meetings for the first year following completion to update you on client integration.

Completion

Once the due diligence has been completed and the contract and integration plan agreed, we will decide a date for contract exchange, when the following documents will be signed:

• Purchase Agreement• Consideration Deed • Warranty Deed• disclosure letter• settlement agreements• novation paperwork (if applicable).

Following exchange, we will begin to integrate your clients, and finalise the completion process. We will work closely with you and your back office system to ensure that all client data is transferred to us in a safe and compliant manner, guiding you through every step of the process. Our Data, Marketing and IT teams will be on hand to support you throughout.

FCA Change in Control and Cancellation of Permissions (from deauthorisation)If your business is directly regulated, we will make a joint request to the FCA for a change in control, or deauthorisation so that we can appoint your company as an Appointed Representative of Attivo Financial Services.

Exchange

3Initial discussions

Ian Plumpton Compliance and Operations Director

14 15Once the contract has been agreed, we will devise a

communications strategy to inform your clients of

the change.

This will include a letter from your business which we

will work with you to produce, followed by a welcome

letter from us a couple of days later. For an asset

purchase, this typically happens within two weeks of

exchange, and within two weeks of completion for a

share purchase.

You and your adviser team will contact each of your

clients who will introduce them to Attivo Financial

Planning and explain more about the process,

answering any questions they may have.

During the meeting you will obtain the necessary

documentation to transfer the client to Attivo Financial

Planning and explain this will be handed over to one of

the Trainee Financial Planners.

The Trainee Financial Planner will be in contact to

explain next steps and set up an initial meeting with the

client’s new Chartered Financial Planner.

Client integration Looking after your clients

An award-winning company, Attivo Financial

Planning believes that looking after clients should be

at the heart of all financial planning firms, and that

clients should receive truly independent advice.

We look forward to meeting each of your clients

personally and developing long-term relationships

with them to ensure they stay on track to meet their

financial goals.

Our highly qualified and skilled team of Financial

Planners and Paraplanners will research the whole

of the market and work together to ensure your

clients receive the most appropriate advice for their

circumstances.

We believe our corporate structure, specialist skill set,

and highly qualified and technically competent team

make us refreshingly different and able to provide

great value advice and service.

“What I’ve found helpful about Attivo

Financial Planning is their personal

touch. No matter how small or large

your investment, you feel that your

financial situation is important to

them.”

Private Client

“I came to the conclusion that the

regulatory environment was no longer

favourable for a one-man band like me

and I knew a bigger business would be

better equipped to cope with it whilst

providing excellent service to my

clients.”

Retired adviser

16 17

Our client experience: the first 12 months with us

We work in partnership with our clients to ensure you stay on track with your financial goals.

The guideline below will be tailored to your individual financial planning requirements.

In addition to these meetings, you can speak to your Financial Planner as often as you need to by

phone, video call or email.

Meeting reminder text message from Chartered Financial Planner

Follow up meeting with your Chartered Financial Planner

and follow up call from Trainee Financial Planner

Within 9 months

1 week prior to meeting

Email from Chartered Financial Planner

1 day after meeting

Preparation of Financial Planning Report by your Financial Planner

Life Magazine sent quarterly from Attivo Financial Planning

Meeting reminder text message from Chartered Financial Planner

1 week prior to meeting

Phone call or email from Chartered Financial Planner

Within 1 month of meeting

Within 6 months

Meeting with the vendor

Introductory letter from Attivo Financial Planning

A call to the client from the vendor

Letter from the vendor to the client

Within 3 months

Annual Review meeting with your Financial Planner

12 months

Meeting reminder from Chartered Financial Planner

1 week prior to meeting

Chartered Financial Planner to book Annual Review meeting

Within 4 weeks of meeting

Phone call from your Financial Planner to confirm agreed actions have been completed

Within 4 weeks of meeting Within 4 weeks of meeting

Letter from provider confirming that any agreed changes to your investments and/or pensions have been made

Call from Trainee Financial Planner to answer any questions and book

Initial Financial Planner meeting

Initial Financial Planner meetingand follow up call from Trainee Financial Planner

18 19

“A few years ago I decided I still

wanted to give advice to clients

but the regulatory and legislative

burden of running a financial

planning business was becoming too demanding,

so I worked with Attivo Group to establish my

business as an Appointed Representative of Attivo

Financial Services.

In 2018 I decided to sell my company’s shares to

Attivo Group and joined the company as a Financial

Planner. For me, being able to give advice without

the burden of running my own business is the best

of both worlds.”

“In 2016, I felt it was time to sell our business

and enjoy retirement as I was in my sixties

and had provided financial advice for over

40 years. I was introduced to Attivo Group

in the April and quickly realised they had the

knowledge, experience and client focus to

provide our clients with the service they were

used to. Due to the structure and tax position

of our firm, I wanted to sell the firm’s assets

rather than the shares and Attivo Group was

happy to accommodate this.

Over the subsequent months we progressed

to Heads of Terms and completed the sale in

October 2016. I didn’t want to be involved in

the integration process, other than working

in the background to ensure a smooth

transition, as I felt this demonstrated the

confidence and trust I had in Attivo Financial

Planning and their high client retention rates

are testimony to their ability.”

Testimonials

Susan Tague

“I had run my financial planning company in Milton Keynes with a business partner for

several years. With my partner having stepped back, the changing regulatory environment,

and the fact I was approaching retirement age, I decided it was time to exit the business.

I met with Attivo Group in October 2017 and worked closely with them for 12 months to establish the right

deal structure, including a handover period so that I could introduce my clients to them. Completion took

place in October 2018 with an excellent retention rate.”

Melvyn Letts

Graham Williams

Ryan Wright Financial PlannerRoxanne Simmonds Paraplanner

20 21

Our valuesOur values provide a framework for recruiting and developing our employees as well as guiding our behaviours

and how we serve our clients. They are reflective of exactly what our business is about: people; as without our

clients or our employees we would not exist.

PerformanceWe deliver forward-thinking advice and service and we are quick to respond to changes in regulation, legislation and market movements. We coach and mentor our people, supporting their development needs so that they can perform to the best of their ability.

EthicsWe always do the right thing for our clients, each other, our business partners and the wider community – we do not take shortcuts. We are wholly committed to providing unbiased, independent advice and every client should feel as though they are our only client.

PartnershipWe work to build honest, long-term relationships with each other, our business partners, and especially our clients to give them confidence in their financial planning.

OwnershipWe strive to decide our own fate and we act with self-reliance and trust in our own abilities. We accept responsibility for our conduct and quality of work so it is ‘right first time’ to ensure positive client outcomes.

LeadershipWe understand the importance of a high-trust environment to enable our people to help our clients. We strive to promote from within and for all employees to have a clear career path to fulfil their potential.

P E O P ELExpertiseWe believe all Financial Planners and Paraplanners should be qualified to Fellow and Chartered status and be Occupational Pension Specialists. We continuously develop the knowledge, skills and qualifications of all our people so we can provide the most technically competent, independent, financial planning advice.

Alix Scott Recruitment ManagerSusan Tague Chartered Financial Planner

22 23

“As a privately owned company ourselves, we understand the

significant time, energy and commitment you have put into

your business and that choosing another firm to take care of

your valued clients is not an easy decision to make.

We think that the best way to look after clients is with a

team of competent, experienced financial services specialists

so most of our Financial Planners and Paraplanners are

qualified to Fellow and Chartered status, and many are

Occupational Pension Specialists.

We also think that clients should have access to unbiased

advice and products from the whole of the market so

despite increasing regulation, we have chosen to remain

independent.

We have a very clear mission as a business: for Attivo

Financial Planning to be the best independent financial

planning company in the UK by delivering the most

professional, technically competent, independent advice and

service to our clients at the greatest value.

We want to be seen as a leader in the financial planning

sector, help change the standing of financial planning to be

recognised as a genuine profession and to ensure we, and the

profession, contribute positively to society and the economy.

We want every client to feel as though they are our

only client.”

Stephen Harper

Chief Executive

Getting in touch

Whether you are just considering your options or are

ready to take the first step, please contact us for a

confidential conversation about how Attivo Group can

help you with succession planning for your business.

Head OfficeHoneybourne Place

Jessop Avenue

Cheltenham GL50 3SH

London Office2nd Floor

2 Babmaes Street

London SW1Y 6HD

Cardiff OfficeSophia House

28 Cathedral Road

Cardiff CF11 9LJ

All post should be sent to our

Head Office in Cheltenham.

www.attivogroup.co.uk

Gemma Marshall

Business Manager

01242 585430

g.marshall@attivogroup.co.uk

A guide to selling your financial advice business V2 (0620) (Public)

Attivo Group Limited (Company No. 05547209) includes Attivo Financial Planning Limited (Company No. 05747914) and Attivo Financial Services Limited (Company No. 05927588). All companies in Attivo Group Limited are registered in England and Wales. Registered O�ice: Honeybourne Place, Jessop Avenue, Cheltenham, GL50 3SH, UK. Attivo Financial is a trading name of Attivo Financial Services Limited (Firm Reference No. 462105) which is authorised and regulated by the Financial Conduct Authority. Attivo Financial Planning Limited(Firm Reference No. 451967) is an Appointed Representative of Attivo Financial Services Limited. Telephone and video calls may be recorded for training and monitoring purposes.