I’ve been reading and thinking about the average wealth management business a lot recently.  It appears that, according to FP Transitions the business valuation firm, the average transaction is 20% in cash with 80% paid over time, usually five years.To my way of thinking, this is not a sale of a business, but rather a salary continuation program where you are putting your continued income stream in the hands of someone you probably don’t know very well.  In fact, I would say the only part of the sale that is a real sale is the cash you get up front.  And, even then it might be clawed back with a guarantee around client retention that you give the buyer.

I think if you’re about to sell your business under this methodology, you might as well not sell and keep your business, run it with a junior partner and slowly fade out.  You should also think about pre-funding your buyout by using the bonus to your junior partner to fund a qualified plan that would benefit you and put real money aside for when you retire.  Read More