M&A and Your Succession Plan: From Industry Hostage to High-Value Exit with Ted Motheral

Today, the financial advisors’ space is seeing the most robust M&A market in history.

A tidal wave of succession planning deals is transforming the advisory landscape, yet many firm owners are unprepared…

Hosts Tyson Ray and Kim Cochenour welcome Mercer Advisors’ Ted Motheral to break down the entire succession planning puzzle, discuss the importance of fit over size, and what drives today’s high multiples.

If you’ve been planning your exit strategy, this episode will provide you with valuable insights  on the topic.

• Ted Motheral kicks the conversation off by sharing some of the current trends he sees in the M&A space.
• The current status quo? “The most robust M&A market in the history of the industry,” says Ted. 
• Ted explains that there’s a real influx in the M&A market of the so-called succession planning deals.
• Tyson Ray depicts a scenario in which advisors tend to be like prisoners – or hostages – without even knowing it.
• Ted touches upon two shifts that have taken place over the last 5-10 years. 
• Ted, Tyson, and Kim discuss how succession planning may vary for three categories: Advisors who have 10 years left at their job, those in their last 5 years, and those in the “emergency succession” phase.
• According to some industry stats, 42% of this industry is going to retire in the next decade and less than 50% of those people have a true succession plan in place.
• Ted shares an example of an effective approach to succession planning.
• Kim, Ted, and Tyson go over the different pieces that make up the succession planning puzzle.
• There are two types of RIA firms: Integrators and aggregators. Ted explains the difference between the two.
• “When it comes to M&A, you’re looking at fit more than size,” says Ted. You’re looking at fit in terms of a fiduciary who provides foundational financial planning.
• The conversation touches upon multiples – at whether they come from the size or preparedness of the firm, as well as why multiples are hitting the numbers that they are.
• Ensuring that your client accounts are sticky is another major point with every successful succession plan.
• Ted lists the traits of the best succession plans and partnerships he has seen in his career, as well as advisor mistakes when it comes to client ownership and selling shares of clients.
• For Ted, financial advisors need to be educated as to what their options are so that they can work better with wire houses and corporate RIAs.

 

 

Mentioned in This Episode:

TotalSuccession.com

FORM Wealth Advisors

Tyson Ray

Kim Cochenour

Ted Motheral

Mercer Advisors

Potomac Law Group

Morgan Freeman

The Shawshank Redemption

Michael Kitsis

 

 

Ted Motheral is Principal of M&A Partner Development at Mercer Advisors. All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Mercer Global Advisors Inc. is registered with the Securities and Exchange Commission and delivers all investment-related services. Mercer Advisors Inc. is a parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Advisors is not a law firm and does not provide legal advice to clients. All estate planning document preparation and other legal advice is provided through select third parties unaffiliated to Mercer Advisors. Tax preparation and tax filing are a separate fee from our investment management and planning services. Trustee services are offered through select third parties with which a client would engage directly, as such additional fees may apply. Mercer Global Advisors has a related insurance agency. Mercer Advisors Insurance Services, LLC (MAIS) is a wholly owned subsidiary of Mercer Advisors Inc.