RIA owners consider selling their businesses with the aim of ensuring succession, capitalizing ownership and delivering better service — but the majority of them feel anxious about their decisions, according to a recent study.
Fifty percent of RIAs say the main reason to sell their business is to capitalize ownership, while 41% say it’s to help streamline succession planning, according to a recent survey from HighTower.
Twenty-seven percent say the primary motivation is to get access to capital for further growth, while 27% cite access to better technology and 23% point to the ability to outsource back-office work, HighTower says, citing 30 one-on-one interviews with decision-makers at RIAs with more than $750 million in assets, both pre- and post-deal, conducted in September and October.
Yet 70% of respondents say they’ve experienced anxiety about their decision to sell, with 64% pointing to the potential loss of operational control as their main concern, according to the survey.
Moreover, 45% are concerned about losing or diluting their brand identity, 36% are concerned about clients reacting negatively and 32% worry about having to change their investment approach, HighTower says.
The key to ensuring a successful deal, according to the survey, lays in the people and culture of the acquiring firm.
“Advisors looking for an acquirer are passionate about finding, first and foremost, a firm with human beings they can trust to shepherd them into the future," Bob Oros, CEO of HighTower, says in a press release accompanying the survey.
To that end, Oros suggests sellers take the time to get to know their suitors, including “having several meals together, getting to know members of the extended service teams (not just the deal-makers), and visiting the firm’s corporate offices to people-watch and familiarize [themselves] with the culture (do the employees walk with purpose and have smiles on their faces?)”