Market Context: M&A Consolidation
Unknown: And when we think about the mergers and Acquisitions and and kind of the consolidating of the financial advisor space You Know by all accounts certainly by my account we’re still in the second or third inning of a nine inning game
Podcast Opening + Topic Framing
Unknown: Hey everyone thank you so much for joining the podcast today um today’s topic is mergers and Acquisitions as I’ve discussed in other podcasts and videos a big part of my role as a consultant is just helping financial advisors debunk misconceptions and cut through some of the sales Spin and noise that’s out there in the industry to make the best time efficient decision possible and where we’ve been hearing a lot of noise and things that simply aren’t true recently or in the mergers and acquisition space recently we’ve been working with financial advisors every day that have been told by other sources that they can receive seven eight times their trailing 12 revenue for their entire practice where 99 9.9 percent of the time that’s extremely far off from reality so the reason I wanted to do this podcast today was just to help you better understand the trends and the mergers and acquisition space what are actual reasonable multiples that you can expect to receive for your business in this environment you know why are financial advisors selling their practice earlier in their career than ever before and also what are strategic acquirers looking for in a potential acquisition so you could best position your practice uh for the future
Introductions
Unknown: On the podcast today I have Jeff Nash my business partner and the CEO and founder of bridgemark strategies to discuss Jeff how are you doing today I’m great how you doing
Corey: Corey I’m doing good thanks so much for coming on the podcast today um Jeff I know you’ve had you know 20 plus years of experience um on on the mergers and Acquisitions topic and almost every day me and you are having conversations about the market place you know why do you think there’s so much confusion out there around you know business multiples and and what financial advisors can expect for their life’s work
Misconceptions: Multiples and Market Noise
Unknown: It’s a great question you know I think some of the confusion is just people don’t know and the problem with people not knowing is and it even comes from I mean I’ve heard stories about literally recruiting firms or I guess that could even call them M A firms that are cold calling advisors and selling their practices and and literally saying hey it’s worth seven eight times and it’s just not even close to reality in almost all of those situations uh so but what’s interesting is all of that information culminates with an expectation that is kind of resetting the The Benchmark you know it was one point in time where we used to say look a practice would go for two times reoccurring or fee based revenue and one times transaction revenue and you can blend that together and that was the value of your business almost regardless now with the in the inclusion of a lot of private Equity money in the space and in the business and with the uh you know with the demand for growth we’ve seen multiples really going way up probably not to the tone of seven eight times Revenue as you’re saying but multiples have gotten more aggressive in it and it’s just understanding how that all works and understanding the the variability that can go into that that I think is a really important part I’m really excited that you’re doing this podcast I think your podcast and your your two-minute Talks on YouTube have been phenomenal for just educating the marketplace Corey so I’m curious to you on that for from an educational perspective and and you know hopefully we can educate some folks today as well
Corey: Yeah absolutely I I really appreciate the time so you know while seven eight times you’re trailing 12 revenue is you know extremely Far From Reality for many many firms out there you know valuations are at an all-time high right now I do get the question from financial advisors all the time Corey This sounds too good to be true how can these firms actually afford some of the multiples that they’re offering financial advisors today so I guess that’s a first question you know how are some of the firms out there that are buying practices for these large multiples how are they making the money work
How Buyers Afford Higher Multiples
Unknown: So it’s a great question and let’s put some context around it right I mean at what point in time is is it too expensive and when we think about that you know here we are in in February of 20 2023 and the you know February 21st of 2023 and we’re looking at companies like Nvidia and Tesla that are trading upwards of a 50 times next year’s earnings uh and how is that you know is that too expensive or not and it’s always relative to the time period uh you know I think what’s interesting about companies you know and if we look a year ago those companies were trading even higher you know certainly from a stock price perspective because they’re down a lot from their their 52-week highs both of them are and yet they’re now trading at 50 times next year’s earnings again and so is that too expensive again there’s a relativity to it what we’ve seen with the massive amounts of private Equity money and now it’s also not just private Equity money but also private family office money that’s coming into the marketplace the reason there’s so much money coming into the Ria and and broke a deal or strategic acquiring Marketplace and the reason the multiples have gone up at these firms is because of growth rate right so ultimately when we think about it Nvidia or a Tesla it really comes back to these companies are growing at such a feverish Pace that that’s why they’re just their stock price trades it so high you know so when we think about some of these these strategic acquiring firms that could be going at a 20 times ebitda 22 times e but uh even as much as 24 and 25 times ebitda which are Untold unheard of prices how is that possible well because they’re growing we see them growing at two and three you know two and three hundred percent growth every two three years and and when we think about the mergers and Acquisitions and and kind of the consolidating of the financial advisor space You Know by all accounts certainly by my account we’re still in the second or third inning of a nine inning game right so there’s a lot more consolidation that’s yet to happen and that’s why we’re seeing so much institutional money coming into the space which is pushing the price at the higher end and Beyond pushing a price at the higher end that’s also increasing price at the lower end because companies want to compete for that business so when we think about you know a typical 150 million dollar Financial advisory practice that’s doing you know million a million or a quarter of Revenue in the past that would have been maybe two times revenue and certainly not today at seven or eight as we were talking about times Revenue but these firms are getting priced out at a multiple on ebitda right which is really free cash flow and if we then take that math of what’s their top line revenue what are their expenses what is the ebitda and or just said okay it’s just math what is that same equation come to if it was just a top line revenue number we’re now seeing firms that have the better firm three and four and even five times Revenue so still a far way off from seven or eight but a long way away from what was two times and those numbers are really being sought after and the way the companies are affording it is because of their growth rate right so their company stock is worth significantly more they’re growing the business itself they’re they’re acquiring the business they’re acquiring the talent and the client assets and then they’re growing that business once it’s on their platform at a much greater rate than it was growing beforehand so all of that together is a long-winded answer to your question of how are they affording this well they’re affording it because they’re able to drive efficiencies down into the business that allows advisors to be better better advisors for their clients more focused advisors for their clients growing their business and the overall acquisition strategy on top of that organic growth strategy is driving that growth rate which then again growth rate drives price so that’s that’s really the formula that we’re seeing in the marketplace
Deal Structure: Cash Upfront, Earnouts, and Equity
Corey: Awesome I think another thing to add Jeff that I’ve I’ve seen a lot you know a lot of people aren’t getting a cash offer all up front for their business there’s a portion up front there’s performance bogeys on the back end they’re also getting potentially you know offered equity in in in in the buying firm as well so the total multiples all together it’s not an all cash offer there’s definitely some some some strings attached
Unknown: Oh no question it’s funny the uh I actually am just writing a Blog right now of whether you should be getting cash versus equity and what’s the value of equity right and so that’s coming out you know online Etc but that’s an important part of that discussion of okay what’s the equity and what’s the equity going to grow at is the equity of value going back to my philosophy if I think about the next five years and we’re in the second or third inning in a nine inning game then there’s going to be so much consolidation and growth that you know it’s likely a lot of these companies are going to continue to do well you know but there’s always things to be leery of right not everyone’s going to do well and when we think about that growth rate when we think about how firms are able to monetize their own growth right that growth then comes from what becomes their next turn and so having equity in a company it’s not just it’s definitely feasible that that company will grow at a fast rate and that Equity will grow at a faster rate but it’s not a guarantee and all things aren’t created equal you know when we think about helping advise users select the firms that they’re going to and from the firms that and we think about how much Equity they can take certainly there’s a willingness of what they’d be interested in taking but we also think about okay what’s the growth rate of this firm how much debt do they carry what’s their historical growth rate have they solved for all three components of growth is it organic growth is it next gen growth and is it acquisition growth or is it just purely an acquisition roll-up on growth which it clearly has a greater level of risk to it you know so Equity is is highly valuable especially if it’s growing you know doubling every two years which we’ve seen in some of these cases uh but it also could be riskier especially as we start getting further further into a more mature consolidation game
EBITDA Explained: Definitions and Math
Corey: So Jeff I think a lot of financial advisors when they’re having conversations with you know recruiters or reading about multiples in the industry as well you touched about it a little bit in the beginning of the podcast but you know can you talk about what ebitda like actually is how a financial advisor can calculate that and then also you know after that what are some of the multiples that they could expect out there you talked about 150 million but you know what about Beyond
Unknown: Yeah I really appreciate you asking that question because actually as I was saying but I was thinking about it is not everyone even is speaking the same language uh so let’s start with just some simple math right there’s a most firms at this point are focused on revenue and assets under advisement AUA you know also called assets under management but advisement is kind of the bigger number where it’s not just what’s under fee based of being managed you’re advising on all assets you know a variable annuity could include assets under advisement for example and so when we think about the the revenue and the assets you know let’s start with just revenue and revenue becomes trailing 12 months Revenue and trailing 12 months revenue is really broker dealer Revenue so for folks that might be in a wire house environment who’s looking at their total revenue that includes lending and and cash management features that would be excluded it’s really just the broker dealer Revenue now how do we take what do we do with that that number right so from from total revenue we will take expenses out of total revenue right and when we think about the m a space compared or differently than a wire house check a wire house check is just taking total revenue and putting a multiplier on it in the m a space it’s on this term called ebitda and ebitda of course earnings before interest interest taxes depreciation and amortization and ebitda and the way it’s calculated for a financial advisory firm starts with total revenue then you subtract out expenses expenses would be if you have a broker dealer this broke a deal or expenses if you have enough your own independent Ria there are as expenses to manage that if you’re using somebody else’s ra or the broker dealers Raa there are expenses related to that and my you know Administrative Office Space you know many things that warehouse advisors aren’t paying for these things but there’s a cost allocation which comes down to you know your gross margin this is well we also call ebok new term ebook is earnings before owner’s compensation and so think about that as an advisor’s gross revenue not the firm’s gross revenue it’s the advisor’s gross revenue if we have 150 million dollar producing firm that has 25 percent expenses right so let’s just say it’s abandoned it’s doing generating a million of revenue for simple math and it has 25 of expenses which includes trading costs and technology and and administrative and office space and all of those things that you have to pay for whether directly as an individual independent advisor or through a wire house with a firm is paying for it your remainder is the advisor’s gross margin gross revenue that’s now what we would call eboc in the independent world that ebook number could be 65 to as much as 75 even in some cases even higher even 80 percent minus from this number when we consider selling a business we then subtract out what we would call replacement cost replacement cost is an advisor even though that’s their gross margin that’s 65 will say 65 70 percent has to pay has two factors in that or two two uh two components that make up that 70 number one is paying an advisor to service clients and the second is being an owner of a business and so on average we would look at an advisor making say 30 percent to service clients that’s building new clients that’s doing the work as an advisor that number could be higher that number could be lower that number could be a salary of two hundred thousand dollars that’s a variable number that is very fluid but we’ll do some averages to come up with that 30 30 percent the remaining in that earlier example where you have 70 ebook or gross margin that remainder becomes 40 that 40 is is free cash flow that 40 is ebitda all the same terminology that 40 is what what the Strategic acquiring bro uh Ria firms that are private Equity backed that’s what they’re buying so we on average will see that ebitda ratio ranging from on the lower end 25 to 30 percent and on the higher end upwards of around 50 percent that’s what we typically see now the multiples are a really important question if we see in that earlier example a 40 or let’s say a 50 but I keep the math simpler for me if we see a fifty percent ebitda on a million dollar business with 150 million in assets and that means after paying an advisor’s salary the business is still generating 500 000 worth of profit in that example we may see that business sell for six times ebitda seven times ebitda or even eight times ebitda sometimes even more if we use Simple Math we say let’s just sell it eight times ebitda it’s not uncommon to get eight times e but for that business assuming important things such as there’s a growth rate right the business should be growing not dying you know if there is a next-gen to help service those clients longer term after the advisor or retire if the advisor is planning on staying around for more than five years so those are factors that can get to that eight times ebitda and we can talk about that in more detail according in a minute let’s stay on the numbers that eight times e but again if the ebitda margin is 50 8 times ebitda is a simple math that’s four times Revenue so that business that’s doing a million dollars is actually worth four million dollars in that example and those are real life examples that’s not meant to kind of inflate numbers those are clients that we would be working with currently you and I that are seeing those numbers again assuming certain things the last assumption that we have in there is that the business is a much is a planning-centric business and that it’s almost it’s majority if not exclusively fee based Asset Management
Wirehouse Comparison: After-Tax Difference
Corey: Awesome yeah and for and for wire house financial advisors that are that are listening to the podcast that’s the difference between a generous two and a half times trailing 12 Revenue multiple for two and a half million at ordinary income tax rates of estimated 40 versus a four million dollar valuation at long-term capital gains rates at an estimated you know 20 tax rate so that’s a humongous difference run that math out and I’m not going to do that for the podcast here but that’s easily three or four times more more after tax money in your in your pocket of course depending on what state you live in because the state income tax on that as well uh but I mean three to four times multiples what you could see in the difference so Jeff we’ve worked on we’ve worked on a few of them together you know some of the firms that are getting you know the 11 12 even you know 14 times Evita you know valuation what separates them from some of the other firms out there that would get a lower valuation what what are the qualities that are governing them the maximum valuation
What Drives the Highest Valuations
Unknown: It it’s largely connected to size is what we see uh you know there tend to be some ranges that we’ll see in the marketplace that can go up or down by one or even two turns you know so what I mean by that when I say up or down by one or two turns if I say a price on average is eight times then is it possible to get to nine or ten yes it’s definitely possible is it possible to get to 14 or 15 if the average is eight highly unlikely uh you know never can tell who’s going to be a buyer that’s going to be super aggressive and and desperate to buy something but highly unlikely for the vast majority of the buyers there’s a lot of price uh neutrality one they all end up in a lot of similar ranges typically for obvious reasons right they understand the value of the business uh so you end up with some similar ranges so an extra turn or two is certainly possible but it’s largely price based when we look at a couple hundred million dollars in assets under management we’re looking at six to eight maybe seven to nine uh you know in the half a billion size it’s probably in the eight to ten possibly nine to eleven in the billion dollar plus size you know it just everything shifts up a little bit more so you’re going to be in the the 9 to 12 10 to 12 potentially even 13 or 14 when we start looking up in the in the markets what’s really interesting as we start looking at those multiples we’re seeing uh from a year ago right where a year ago prices were off the charts everything was great you know the economy was great interest rates were zero it wasn’t that or practically zero I mean I could say started raising a little bit a year ago but it was but things were was really humming along what we have seen in the marketplace is because there’s still so much demand and because there’s still such a focus on growth is the price actually hasn’t dropped that much uh it has gotten more more uh I guess I would say intelligent as it relates to how to price it so we’ve seen more of a shift towards maybe a little bit less up front more on the back end putting more growth measurements out there to get to those same numbers uh but the pricing overall can still be very close to where it was a year or so ago uh in the marketplace it’s again there’s more factors that can go into it there’s more variability that can go into it uh you know but it’s and it’s probably a little bit less upfront money that goes into it uh as compared to where we were a year year and a half ago but there’s still a lot of really aggressive prices in the marketplace for a high quality business this is the part that you know what can an advisor do about their business and this is maybe something that we can spend a minute or two on because when I think about this the high quality businesses today are incredibly sought after and on the flip side of that the non-high quality businesses I literally are seeing these strategic buyers who you would think would buy almost anything are saying they’re not interested in the high quality businesses are those that are still growing that’s number one important element if they’ve stopped growing over the last one two or certainly three years then the price will dramatically fall there still will be buyers interested not as many uh and it will be a lot more regionality so you could be you could find some of these National buyers that have 20 30 40 50 or more billion in assets that are buying on a national scale and if your business is falling and you’re in a marketplace where they’re not in they probably won’t be interested if you’re in a marketplace where they already have a presence then they would likely what they call tuck you in to an existing president so you could get likely at least a good price or maybe even a better price with that tuck-it strategy so one of the important messages here is if you’re if you’re five years away ideally that’s that’s really probably the best time to start looking at this if you’re two or three years away and you’ve already started to kind of Coast you’re a little bit late to the game uh and so we should definitely have conversations okay how do you maintain what you’re doing and still maximize that price assuming you want to take care of you know kind of sell the business to the next you know kind of and keeping it keeping it around there’s always a strategy that we always see from advisors that that of course you know advisors want to utilize which is they’re just going to milk the business you know it’s not necessarily the best service for the clients but it’s definitely something that advisors can choose to do and just milk the business um but the five-year window is a really important window when we think about that being fee-based majority being planning Centric uh and being growth and having time to still grow those are some of the key elements that will get you the better more buyers and of course more buyers become more bidders and more bidders become better priced
Sell-and-Stay Shift
Corey: In the beginning of the podcast we talked about some of the trends that we’ve been seeing and I think a lot of financial advisors when we speak with them on the phone and talk with them about their options I still think there’s a lot of financial advisors out there that think when you know they sell their business it means that you know they’re they’re they’re they’re they’re selling their assets they’re working for a couple years and then they’re you know phasing off into the sunset um where and and in fact there’s been a over the last couple years a a pretty big shift where a lot of financial advisors actually want to sell and stay in place um and we have more of those conversations every day can you kind of you know talk about that shift and what that potentially looks like
Why Buyers Prefer Sell-and-Stay
Unknown: Yeah it’s an important shift it really is it goes back to what I was just saying is having five years or longer uh you know for those advisors that are thinking I want to retire in a year the prices that we’re talking about where can be really robust pricing is it may have already passed you by and so the sell and stay strategy has really designed a lot of it by these firms these firms part of the reason they’re growing is they get advisors that are still energized to grow who are frustrated with the the regulatory the all of the elements that are being imposed by their broker dealer or compliance professionals and at the end of the day they love being doing financial planning for clients and helping clients you know with achieving their goals and that becomes a lesser and lesser percentage of their time as their business grows whether you’re in a wire house or otherwise we all know the same statistics is that less than you know 50 of your time is spent upwards on other things and it’s a little bit higher on the independent side because they got to run a business and a little bit lower on the warehouse as it relates to those percentages uh on on other things right a little bit more time on just servicing clients and the more you can take that off all those things off of your plate the more Focus you can be on helping clients and it allows you to grow your business and it re-energizes you and that’s what these firms really are interested in they’re interested in advisors growing they’re interested in the sell and stay scenario more than anything because their belief is they can help you grow faster and it’s not just their belief it’s a proven track record at this point because this is not something that is you know it’s it’s we’re not that early where this would be the wild west if you will where we’re just still experimenting this is well proven that they can increase your efficiencies and help you drive growth at a faster rate which drives the growth of their company and having that alignment and then Equity ownership everybody’s aligned and everybody’s moving in the same direction and it really is that sell and stay scenario is is what’s preferred what’s I’ll take that a step further what does that mean that’s not a 60 year old looking to stick around for three to five years and then retire we’re seeing more and more advisors in their 50s and even in their 40s who are looking at this strategy recognizing that there’s an expression they could be you know the captain of a dinghy you know or maybe the lieutenant on a battleship and they’re going to have a lot more resources to be able to support their clients provide better expertise better planning better results and having more fun doing it because of all the obstacles and then and they still own equity in what becomes a fast-growing company and that’s what checks a lot of boxes for a lot of people uh is they recognize that they can actually still have a lot of fun and still do really good work for clients and still have equity in the growth opportunity to really continue to make a lot of money Beyond just cash flow by having equity in that parent company
Advisor Experience: Getting Back to What’s Fun
Corey: And we speak with a lot of financial advisors Jeff that you know they’ve built an amazing business they absolutely love working with clients but they’ve grown into this Captain role and they don’t really want to do all the roles that that come along with that the the the HR reviews like being the leader they want to get back to serving clients and and building their business again the things that that are really fun and they have the ability to do that with a sale many of times all sorts of things that they don’t want to do and focus on what’s important to them if they find the right fit
Equity Upside and Cautions
Unknown: Yeah I mean it’s just some of it maybe it’s just putting some framing around it I mean I know of one particular firm I mean they’re like 60 billion dollars now um but I know an advisor to join them eight ish years ago maybe it’s even 10 at this point uh and he’s literally grown the equity value because of the of the VA the company he bought he sold his company he was a 250 million dollars he’s now managing 2 billion and he got equity in the company and the the return on that Equity investment has been a 50-fold growth growth number so I mean if you think about I mean that’s literally if he had a million dollars in equity I don’t know what he took that million dollars was worth 50 million dollars and that’s different than the 2 billion of management that he’s now managing which is also his cash flow uh it’s insane what we’ve seen with some of the growth from these companies and and how and you think this person ever looks back and says hey this was this was not a good move clearly right and does he have frustrations I’m sure there are some frustrations every day everybody’s got frustrations there’s nothing perfect um but overall his he’s doing more things that he enjoys doing he’s actually increased his client minimum so he’s dealing with only Million Dollar Plus clients and he’s just having it more fun than he’s ever had and you know and that’s and he’s done really well for himself obviously so it’s it really is a story when you you know when you take away those distractions that that become almost a pain on the business and now you can focus and you still have equity in this thing that you’re doing and you have everybody you’ve got a lot bigger Team all driving towards Equity you know the only thing I’ll say on Equity the one last thing which may be a bit of a segue here is for those folks out there that are going through this conversation there’s a couple things to think about number one is be careful on the amount of equity versus the amount of cash right there because there’s a diversification strategy on some of this number two is make sure you understand the company that you have equity in and number three also understand that there can be share class differentiations in the equity pool right so does the private Equity or or family office or whoever the Institutional Investor is do they have the same share classes the CEO do they have the same share class as you as an advisor who’s been acquired uh those are important questions to ask and understand when you think about you know Equity distribution and and why
First-Time Seller Pitfalls
Corey: Yeah you know many people have only you know they’ve sold zero businesses in their life this is their first time they’re considering it and there’s you know there’s a lot of pitfalls to avoid and a lot of questions to ask that you know a financial advisor might not just know to ask because it’s their first time doing it so definitely makes sense to work with someone um you know who’s done this before for sure but you know Jeff one other big Trend that I’ve been seeing um that a lot of financial advisors might not know about as well um is the partial sale you know I’m working with a financial advisor right now you know a multi-million dollar firm you know the father’s been in the business for 25 plus years he wants to get out of the business and pass the business on to his two sons um but he wants he wants an equity event to be able to uh you know retire comfortably yet he wants the flexibility to pass something on to his sons that they’re going to be able to build and own down the road and I can I tend to have more conversations like this every single day we talked about the entire sale where you wind up being an employee of the firm that buys you but can you talk about the partial sale a little bit
Partial Sale: Financing the G2 Transition
Unknown: Yeah absolutely uh and I may come back to a different concept as it relates to gender what you’re calling the kids is we all kind of call as G2 because it doesn’t have to be the kids obviously exactly uh and and in that scenario it’s any G2 right generation two whether it’s kids or non-kids it’s the the principal has the similar challenge and and again going back to firms that get better multiples firms that have a G2 in place are absolutely going to get a better multiple than a firm that doesn’t have a g to replace so not just the advisor’s willingness to stick around and tenure and growth rate but also having that next generation of advisor inside of their firm is an important piece to multiples uh from a strategic buyer perspective as it relates to the partial sale it’s a great strategy it’s another way to solve uh you know what becomes a common problem what we’ve seen is when we think about G2 no question I mean there are tens of thousands of advisors in the industry that are seeking a G2 and that’s not even an exaggeration literally tens of thousands of advisors are seeking a G2 there are more advisors I think the statistic is there more advisors over the age of 70 and it may even be over the age of 80. I can’t remember the exact statistic more advisors over the age of 70 than under the age of 30. and by the way that stat may be over the age of 80 under the age of 30. so there’s a huge need for G2 in in the industry and again tens of thousands advisors having that solve only solves half the problem because then what happens is I’ve got a client right now that has four advisors as G2 and but you can’t sell to a G2 is part of the problem most 30 and 40 year olds are still earlier in their lifestyle you know life cycle they’ve got kids at Young ages and they’re not interested or willing to take on a multi-million dollar loan separate from their house to buy out the principal and that’s what the transaction becomes is you have to take on a multi-million dollar loan put it in your own personal name to buy out the principal’s interest and many of the g2s are great advisors and could even turn into a you know rainmakers and leaders Etc but that to go from point A to point B of financing it and borrowing all that money to take out that that senior advisor is something they’re not willing to do and this is where the partial sale comes into play the partial sale allows you to sell what becomes thirty percent forty percent fifty percent there are different firms that have different formulas but it allows you to sell a percentage of the business which essentially buys out the senior advisor and then the business itself right so the senior advisor still has some Equity but now they’re taking the cash for that what becomes that 30 so their piece their piece drops way down and now it allows the junior advisors to continue to just grow with the business the senior advisor is not looking to necessarily retire tomorrow and that partial Equity piece becomes an Institutional Investor in your business and this we’ve seen um moving down Market is where we’ve seen it even to this to the tune of a couple hundred million dollar practices right financial advisor firms that have a couple hundred million million and a half of Revenue uh you know typically two million of Revenue the floor can be in that one and a half to two million Revenue um but it’s not in the multi-billion dollar you know tens and 20 million of Revenue space anymore it’s really moved down Market to have these Solutions available and it’s the same type of a solution in a in a two billion dollar firm you have a similar scenario where it’s just that much more money that you can’t the Juniors can’t afford to buy out the senior year and in a 200 million dollar firm it’s a very similar scenario just different numbers different scale where they can’t afford to buy it so that partial scenario is it’s great to bring it up because again I don’t know that people know it’s out there in the marketplace uh you know and it’s a two-part solve part one of the solve is out there you know Finding G2 there’s a huge need of G2 in fact as you know Corey we’re kind of just launching a website to really help G1 advisors in the marketplace finding G2 advisors right through our website bridgemark strategies uh and it really is that that goal of matching those folks who would like to be a G2 with those folks who needed you to uh and so that’s something that we’re launching that becomes part one of it then part two is okay now that you’ve got G2 in place great the company is going to have a better multiple most likely now how do you finance that and there’s clearly debt financing that some people might be interested in but now there’s also Equity financing and that’s the big shift that Equity financing to be able to do a minority and still retain control of the company still retain the direction of the come company and still again sell the company again in the future should you want to sell it again so many solutions out there it’s uh it’s great it’s constantly pivoting um
Market Evolution: More Buyers, More Structures
Corey: Yeah very complicated no question and now even some of the you know the broker the top independent broker dealers out there or you know acquiring financial advisors underneath their umbrella in minority and entirety as well so you know everyone seems like they’re stepping up to the plate for sure Jeff do you think there’s anything that we didn’t cover on the call today that you think you know listeners should know about
Evaluation Framework: Feel, Fit, and Financials
Unknown: About you know I think we did a it was great I mean there’s so much information here um you know and actually honestly Corey I would love to see maybe some of your YouTube videos pick up maybe just bits and pieces just kind of highlights in two and three minute segments you know so that someone doesn’t have to listen to the whole call if that’s something they don’t want to uh so just something for you to consider the but there’s so much you know the biggest thing here is clearly the complexity right there’s so many different directions there’s so much so many so much opportunity for folks and it really starts with help educating people you know the only thing I would add to it is when it comes to evaluating firms what our philosophy has always been around feel fit and financials and in a strategic buyer type perspective that doesn’t change feel fit in financials is by far the best way to find the right partner for your solution uh it helps you manage the the team the staff the junior advisors if that’s applicable helps you message to your clients how and why you selected a firm right going through the proper evaluation of any firm and utilizing field fit and financials I think is an important piece to to add to that
Wrap-Up + Call to Action
Corey: Awesome Jeff I I really appreciate the time today uh I thought I thought and if anyone has any questions on the mergers and acquisition space what their practice is worth or what their options are um please reach us at www.bridgemarkstrategies.com and we’d love to have a conversation thank you so much for your time hope you have a great day [Music]
Unknown: Thank you [Music]
