What type of seller are you?

M&A strategy took a back seat at the onset of the coronavirus pandemic as wealth management firms were laser-focused on helping clients in an incredibly turbulent time. Despite an initial slowdown in deals, the M&A market regained momentum with record activity June through August — that three-month period had the highest total deals and client assets under management since Fidelity began tracking in 2016.

With M&A heating back up, firm owners considering a sale need to think about what type of seller they are to help strategize a long-term vision. So are you a Motivated Mover, Eventual Departer, Legacy Keeper or Scale Seeker? Let’s find out.


Motivated Movers are ready to exit the business with an external sale now to experience benefits such as relinquishing day-to-day management activities, actively de-risking personal net worth, capitalizing on high firm valuations to monetize the business and using a sale to provide opportunities for next-generation leaders.

If this sounds like you, think through: Are you ready to start the next chapter in life? Have you fully considered the potential impact on current employees and clients? Do you have the necessary buy-in from internal stakeholders?

If you’re a Motivated Mover, consider these steps to help you move toward a sale:

  • Prepare yourself for the sales process by examining the M&A market, identifying potential acquirers and conducting a firm valuation.
  • Identify what your firm brings to the table — such as talent, an attractive client base or market presence — and how to market it, but also take time to define the buyer attributes that best complement your firm.
  • Establish a sales strategy and outline a realistic timeline to complete the transaction. While some deals are executed in as little as six months, be prepared for a 12- to 18-month timeline to close a deal. 

[More: Small RIAs delay succession planning during pandemic: DeVoe survey]


Eventual Departers also plan to exit the business through an external sale but aim to do so in three to five years. They would like to continue running the business in the intermediate term, have interest in selling to an outside buyer to maximize firm value, and are looking to provide an opportunity for next-generation talent.

Before you decide a delayed sale is the right fit, first reflect on: Have you considered the inherent trade-offs, including that operating independently may become more challenging as larger, capital-intensive acquirers drive industry concentration? Are you comfortable with the fact that waiting to sell may mean missing peak market valuations or the opportunity to de-risk? Are you prepared to operate in a changing environment with an aging client base, an increasingly competitive market and the potential for outside events that could put the business at risk?

Once you’ve reviewed the considerations, consider these next steps:

  • Commit to preparing your employees for the transition and change of control.
  • Conduct a firm valuation to better understand your firm’s value drivers and identify areas that can sustain or increase firm value, such as investing in technology and talent or acquiring new profitable clients. Remember to define the buyer attributes that are best suited to benefit from what your firm brings to the table.
  • Network to meet contacts who can help identify opportunities for a future sale and evaluate possible risks of a delayed sale.

Instead of looking for an external buyer, Legacy Keepers want to plan an internal succession as their path to retirement. They seek a phased exit and aim to preserve firm culture by cultivating the next generation of potential owners and rewarding them with the opportunity to buy into the firm. 

If you’re thinking “That’s me,” also consider: Who are the next-generation leaders, and how will you prepare them to lead the firm? Are you willing to endure a long transition timeline, and do you have a plan in place to ensure all business functions are in good order during and after the transition? Are you prepared for potential trade-offs that come with choosing internal succession, including that maximum valuation may not be reached and financing may be required to transition equity?

If an internal succession is right for you, consider these next steps:

  • Put your objectives in writing, including a timeline, to help you remain focused on achieving your succession goals.
  • Clearly communicate to your team how you plan to offer equity and implement a long-term succession plan, including things like defined roles for next-generation leaders, training and development opportunities, and ways to purchase equity stakes. Then, investing in coaching and leadership training to prepare your next-generation leadership talent.

[More: Triple Play: Improving your firm’s valuation]


Scale Seekers are looking to accelerate organic growth and gain economies of scale by upgrading to a stronger technology, operations and service platform. Their focus is on becoming more competitive, growing client relationships and further developing the business by reducing management demands and compliance responsibilities. Scale Seekers must be ready to accept a change in decision-making authority and have confidence that their client base is likely to move with them.

Sound like you? Be sure to think through: What are your expectations of a partner firm? What aspects of your firm do you want to carry through? How could different partnership models help your firm achieve growth, productivity and profitability goals?

To help you get started, consider these next steps:

  • Write down the top three to five priorities for the firm to maintain post-acquisition. Be sure to identify the operating and cultural values you seek to maintain and the service or operating gaps you wish to close by joining an affiliate. Then translate your needs into a wish list for the partner firm, highlighting the attributes that are most important to you. Without careful thought and planning, a sale of partial or whole equity could lead to misaligned strategic interests with the partner firm, so clarity around expectations for the deal is key.
  • Understand the expectations of your capital partner around strategic priorities, role changes and the investment timeline, and use this knowledge to structure an agreement that meets your long-term needs.

No matter what type of seller you are, it’s important to ensure you are prepared emotionally for change and have considered the impact to your employees and clients. Be sure to tap into an M&A consultant to help with tasks such as conducting a firm valuation, marketing your firm, exploring partnership models and implementing a long-term plan.

Taking the first step in understanding these options and their trade-offs will help your firm have a greater sense of control, as well as a competitive advantage when evaluating opportunities that come your way.

[More: What firms need to know about M&A in today’s landscape]

Scott Slater is vice president of practice management and consulting for Fidelity Institutional.

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