Selling Tips: Choosing the Right Culture for Your RIA

Selling Tips: Choosing the Right Culture for Your RIA

Selling to the highest bidder isn’t just about getting the highest price for your business. It’s also about ensuring you’ve found a partner who respects and appreciates your firm’s goals, values, expertise, and talents. Getting a significant financial return is, clearly, important when transitioning ownership of your firm.

However, there is much to be said for aligning with the right buyer’s culture. As fiduciaries and advisors committed to putting our clients first, we must be mindful and strategic in everything we do. This includes selecting the right partner to work with over the long haul.

This post covers the following:

  • Don’t make rash decisions that could impact your future
  • The importance of keeping as objective a view as possible
  • How long will you be staying on with the firm post-sale?
  • Culture matters, both for your team and your clients 

Don’t Make Rash Decisions That Could Impact Your Future

Even when the money looks mind-boggling, selling your firm is not a decision to take lightly. Too often, firms make rash decisions with their eyes on immediate gains… only to regret them down the road. This is especially true regarding the possible sale of your practice. 

There are several reasons why selling your firm can seem like a good idea today (and we’re not knocking any of them). Nevertheless, if this is done too quickly, without due consideration, it can negatively affect you and your business in the long run. There’s nothing wrong with wanting to realize value for the years of hard work and dedication that you and your team have put into building your practice. 

It’s essential to verify that you aren’t handing it all over to someone you’ll regret partnering with in the future. For example, conduct your due diligence and research potential buyers thoroughly before entering into any agreement. Otherwise, you could end up selling off valuable assets or intellectual property that might have otherwise been valuable years down the line. 

Additionally, if prices are set too low at the outset when negotiating with a potential buyer, this could negatively impact future negotiations with other potential buyers. Selling off too soon may also mean sacrificing future opportunities for further growth and expansion. You never want to close a deal with someone only to learn that they don’t support you in these key areas.

Keeping As Objective a View As Possible

Objectivity is essential for selling your firm. As much as you may have enjoyed running your practice, there will be a point at which money comes into play—and that has to be kept in mind throughout the negotiation process. Sellers who get so caught up in other goals (such as preserving legacy or relationships) that they forget to focus on their return on investment tend to have regrets.

Again, the most successful sellers are those whose decisions are based on research and facts, not just emotion or opinion. Hard numbers are what you need to get the best return possible from a deal. You need access to information such as your historical performance data, market trends, competitive analysis, and anything else providing attractive insights.

At the same time, it’s also important to remember that negotiations can take unexpected turns during a sale. Always be prepared for scenarios where things don’t go as planned, such as a buyer proposing terms outside the initial discussion. 

Similarly, don’t be surprised by a competing offer coming in at a lower price than expected. Keep aware of what could happen. This helps ensure you aren’t caught off guard by sudden changes or surprises during the negotiations phase.

Not Sure if You Should Sell Your RIA? We Have a Free eBook To Help You Decide.

How Long Will You Be Staying On With the Firm Post-Sale?

One of the most pressing questions you may face, professionally, is whether or not to stay on with the firm after the sale. There is no right or wrong answer here. It all depends on your preferences and goals. Continuity may be the biggest advantage to staying on with your independent RIA firm post-sale. 

Clients appreciate stability and reliability, so having familiar faces at the helm can help foster trust and loyalty in existing client relationships. There are also other advantages to staying on after a sale. You may have more autonomy and flexibility within your role and access to new resources that may not have been available before the sale. These could help expand your reach and capabilities.

On the other hand, there are also potential drawbacks. For instance, some buyers may require management style or staff composition changes. These might not be ones that you are comfortable making or going through. Additionally, it can be hard for staff members who have been part of a company for many years to adjust to new ownership structures and policies. 

This could result in tension between the old and new management styles over time. Meanwhile, financial considerations could be involved if you decide to transition out after a sale has been completed. If, for example, you were expecting certain benefits from the sale that don’t materialize, that can strain your finances.

Deciding whether or not to stay with your RIA after a sale is completely up to you. It’s important to weigh the pros and cons carefully before deciding. Whether you decide to stay on or transition out, what matters most is that you make an informed decision that’s a win for your clients, your team, and your practice.

Culture Matters, Both for Your Team and Your Clients

The onboarding process for prospective clients is complicated and multi-faceted. It involves more than just getting to know your client’s financial goals and objectives. Understanding their values, beliefs, and culture is also essential. This can mean a strong, long-term relationship with your client when done correctly. 

“Culture” can be defined as the shared set of values, beliefs, attitudes, and norms held by those who work within an organization or company. It encompasses everything from the way people dress to how they interact with each other in the workplace. It also affects how they approach decision-making and problem-solving. In short, it’s what sets one practice apart from another.

Understanding the culture of prospective buyers ensures that everyone involved in the onboarding process can feel respected and appreciated. This, in turn, can help build trust, facilitating stronger relationships between an RIA firm and its clients. As a result, clients’ loyalty should increase over time.

It’s not just clients who benefit from an excellent cultural fit, either. Your team members can be positively impacted, as well. When they feel valued in their new environment, they are more likely to stay with your company for more extended periods of time. ​​​​​

Don’t Run the Risk of Losing High-Revenue-Generating Clients

Overall, when it comes to selling your RIA practice, avoid losing your highest revenue-generating clients. Take careful steps to ensure a compatible culture throughout the process and partner with legal and financial experts who understand these concerns. This can minimize your risk.

ViaWealth LLC is ready to grow with your firm. Schedule an appointment to learn more.

ViaWealth, LLC is a Registered Investment Adviser. Information in this article is for educational purposes only and is not intended to be an offer or solicitation for the sale or purchase of any specific securities or other types of investments. Investing in the securities markets involve risk of principal and unless otherwise stated, returns are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before making any financial decisions. Past performance is not indicative of future performance.

More about the author: Reid Larson

Reid is the Managing Member and Founder of ViaWealth LLC.

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