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Compliance tip: What to consider before selling your firm

Selling an advice firm is a big decision and can often be a complex and drawn-out process. But reviewing the following areas prior to any acquisition discussions can help smooth the ride and lead to greater success.

Culture: Not only is having an appropriately client-centric culture a regulatory requirement, it will also be of interest to potential acquirers. Having a thorough understanding of your internal culture and how it manifests itself throughout the organisation will help you demonstrate both the value of the business and its commitment to regulatory obligations.

Policies and procedures: Policies must be tailored to your operations and be supported by a full suite of procedures, with appropriate controls in place to ensure they are followed.

Recordkeeping: Ensure your recordkeeping is accurate and up-to-date, as any gaps in documentation can raise concerns about the adequacy of your systems and controls.

Management information: Review your MI reporting structures through the eyes of a potential acquirer. Does your MI provide evidence of effective governance and compliance, as well as strike an appropriate balance between commercial objectives and client outcomes?

Quality of advice: An independent assessment of the quality of your advice files provides the assurance your firm is delivering robust advice and meeting regulatory expectations in this area. Undertaking this prior to any potential acquisition also enables you to address any weaknesses or failings before embarking on a formal due diligence exercise.

Phil Deeks is technical director at TCC



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There is one comment at the moment, we would love to hear your opinion too.

  1. That’s all very well, but in my view you have omitted the most important points from a vendors point of view.

    1. You need to do thorough due diligence in the purchaser. Their firm and the important members of their team. Too many are actually men of straw who want to buy your firm on the hire purchase. You are not their banker and if they can’t afford to pay up front or over 2 years max then they haven’t done their due diligence, and they probably don’t have the money anyway.
    2. Don’t have an inflated idea of the value of your firm. Honestly – if you were buying it how much would you be prepared to pay.
    3. The quality of your advice is all very well, but what of the quality of their advice and how do their charges compare. Don’t forget you only really have on real asset and that is your clients. If they don’t stick with the new firm they are in effect buying nothing. Culture, service and charges should be compatible.

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