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What it Takes to Build an Independent Firm Today for Maximum Value Tomorrow


While so many advisors are attracted to the freedom and flexibility of independence, it’s the potential of long-term value that they often breakaway for.

The prodigious momentum towards independence has created a whole new generation of entrepreneurs who are attracted to more than just the freedom and flexibility of the space. They’re eschewing short-term payouts of brokerage recruitment deals for the long-term potential of building an enterprise with maximum value that will be appealing to buyers in the future.

Yet at the end of the day, not all firms will become the most desirable acquisition target. And with greater competition to capture the attention of the right buyer, the bar for differentiation becomes set that much higher. That said, those with their sights set on an M&A opportunity down the road will need to design their firm from the outset with the end in mind. That is, identifying the attributes that create value and building it today as if they’re selling it tomorrow.

Is it a practice or a business?

A practice is a firm that is lifestyle driven, lacking both scale and a deep bench of talent; it essentially exists for the purpose of maximizing cash-flow for its owner. A business enterprise, on the other hand, is decidedly big-picture focused, often sacrificing short-term upside for long-term impact. Ultimately, the eye is on the prize: Maximum value creation at the end of the day.

Surely, there’s nothing wrong with building a practice that provides a comfortable living and quality of life. It serves their clients’ needs and satisfies their own business goals—which may not include the desire to be acquired in the future.

But for those who have their sights set on creating something bigger, the key is to build with the end in mind.

So what are the attributes of a firm designed with the end in mind?

In a recent podcast episode with Liz Nesvold, founder and managing partner of Silver Lane Advisors, we discussed the key components of some of the most successful independent businesses with what she describes as “real franchise value.” And that value is not created by accident. As she put it, “When building with the end in mind, you’re essentially building out the attributes that will make you attractive.”

Amongst those attributes are the following:

  1. A strong operational infrastructure;
  2. Deep bench of talent;
  3. Replicable processes;
  4. Scalability;
  5. An intense focus on growth;
  6. And solid client relationships built on long-term trust and confidence.

Related: Advisors: An Annual Reset Can Change Your Business Life

What will it take to get from here to there?

The extraordinary growth of the ecosystem that now supports the independent space makes it more possible than ever for a would-be entrepreneur to leverage the talent, skill and capabilities of any number of professionals. As such, advisors considering the space can tap into service providers, consultants, investors, attorneys, recruiters—each adept at building a scalable business enterprise.

We’re currently experiencing what Liz and many other industry experts define as one of the most exciting and opportunity-rich environments for independence. The ability to build and grow the business of your dreams, and to capitalize on it in the long term is within reach for any entrepreneurial advisor with a clear vision and design on the future. Focus on that future now and build from there—the reward potential has never been greater.

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