Independence to Increase Enterprise Value


You spend your most productive years building an advisory business. You earn your clients’ trust and develop the relationships over time. They are your clients because of the service provided by you and the team you have assembled.

You guide your clients through their life events: houses, births, college educations, inheritances, and retirement. You continue to grow and build your practice’s clients and staff. You stay abreast of the best investment management tools and solutions and technology for your clients.

After decades of work, what is your next step? What is your succession plan?

Your next step depends on the advisory business model within which you work: wirehouse, independent broker dealer, independent RIA, bank, insurance company.

The Employee Model

If you are an employee of an investment firm and you have no ownership or ownership potential, you have spent your life’s work building up someone else’s enterprise value.

Golden handcuffs in the form of non-competes, non-solicitation agreements, notes and a dose of abject fear of your current employer remind you to hold your head down.

If you maintain the status quo, do you emerge from your career with a gold watch?

You could make a change. Gray haired breakaway stories dot our landscape. Greater business model transparency emboldens the brave captive advisor. More captive advisors are becoming brave.

Fear of losing your clients is the biggest obstacle yet clients overwhelming move with their advisors.

Joining an existing advisory firm solves much of the infrastructure issues that a current employer provides. Technology grows cheaper every year so the tools of an independent advisor often equal those offered by a wirehouse.

The Independent Model

If you have ownership or ownership potential in your firm, then you have a business model advantage and are building enterprise value. Although, addressing your succession planning may still loom larger than life.

As an owner, you have four choices in front of you. You can participate in a roll up with a large aggregator, sell to a small bank, sell to another wealth manager or create an internal transition. We will address each of these choices in the next blog post.


Guidance from the consulting firm, Deloitte on the topic of enterprise value in general.

“The decisions a private company owner makes, in some form, will have an impact on the value of the enterprise — not only what a company is worth at the moment, but what it can be worth in the future. Whether you built your business or you took control from a previous owner, you must continually ask yourself and your management: How are we creating value, even incrementally, and for whom — current owners, potential buyers, the next generation, or a private equity partner? Focusing on the value question is critical at every stage of your company’s development and more so as you consider transitioning to new owners. And preparing for transition as early as possible is vital to maximizing value. Whether transition is 10 months or 10 years away, planning will provide the greatest chance of having the most flexibility and alternatives. It also will give you time to weigh your options and understand how to strengthen the potential of various alternatives… The key to driving value is recognizing and acting on the components of value such as strong revenues, attractive margins, and balanced leverage.”

Link to the Deloitte white paper