Solicitor in Leicester for
Selling a Financial Services Business
I’ve worked with Steven for a number of yeears. Unusually for a lawyer, he is very commercially minded, and can get to the nub of issues straight away. Would thoroughly recommend him.
0116 3667 900
Financial Services Firm
Solicitor in Leicester specialising in Selling a Financial Services Business
If you’re considering selling your financial services business, then you’re in luck. I’m Steven Mather Solicitor and I’ve helped many financial services firms with selling part of their client bank or selling their whole business.
While some considerations for selling a financial services business are similar to selling any other type of business, there are also specific factors to keep in mind.
As an expert business sale solicitor in Leicester, I have extensive experience guiding business owners through the process of selling their businesses across multiple industries. Each time I strive to provide:
- Plain English Advice
- Time – to understand your situation and all that you’re faced with
- Results – getting the deal done quickly
- Value – fixed fees for your certainty where possible
- Digital Approach – we use tech to make your life (and ours) a little easier.
Financial Services, what’s that?
Firstly, let’s consider what I mean by a financial services firm. Obviously, you know who you are, but if you are FCA regulated in some fashion, then I’d consider you a financial services firm. I’ve acted for a number of independent financial advisors (IFAs), some directly authorised and others that are appointed representatives. I’ve acted for employee benefits companies, mortgage brokers and mortgage advisors, insurance brokers and more besides. I know what the FCA are like and what the regulatory framework looks like. Crucial to deals can be matters such as networks, commissions and remuneration, clawbacks, and such like. I set out below some key matters to consider when selling your financial services firm.
Here are some insightful steps you can take to prepare your financial services business for sale.
Ensure compliance is covered
Financial services businesses are heavily regulated, and so any buyer is going to want to look at your compliance records, claims history, and ensure that you have done everything properly.
Many experienced buyers will carry out details due diligence (as set out below) and often select random files to review to ensure compliance. Of course, that means ensuring your files are clean in terms of fact find, reporting, advice, and all such documentation.
Aim for client retention
Clients are the lifeblood of any financial services business, and it is important to have a plan in place to retain existing clients and transfer them to the new owner. A smooth transition of client relationships is critical to maintaining the business’s value and reputation.
Often an experienced buyer will include in the share purchase agreement or asset purchase agreements deferred payments based on client retention. This could see a percentage of the overall consideration applied depending on how many clients leave. It is crucial in those circumstances that clients are retained and as a seller you can help smooth the transition.
Staff retention factors
When selling a financial services business, retaining key staff is critical to maintaining the value of the business. Losing experienced and talented employees during or after the sale can have a significant negative impact on the business’s value and reputation.To retain key staff during the sale process, it’s essential to communicate openly and transparently with employees about the sale and how it will affect them.
It’s also important to offer incentives to retain key staff members, such as retention bonuses or equity ownership in the business. Retaining staff with experience and expertise can help ensure continuity of service for existing clients and prevent potential client loss during the transition.
Lastly, the new owner should demonstrate a commitment to the business’s success and its employees’ well-being to foster a positive culture and maintain staff morale. Open communication, collaboration, and a clear vision for the future can help build trust and loyalty among employees and increase the likelihood of their retention
Due diligence when selling a financial services business will involve a more specific and detailed analysis compared to other types of businesses.
Some of the key areas that a buyer will focus on during due diligence for a financial services business include:
Regulatory compliance: As financial services businesses are heavily regulated, the buyer will review all licences, permits, and regulatory filings to ensure the business is fully compliant with applicable laws and regulations. This includes reviewing compliance with anti-money laundering (AML) and know your customer (KYC) regulations, as well as data privacy and security regulations.
Client retention and transferability: Clients are crucial to the success of a financial services business, and the buyer will want to understand how client relationships are managed and how clients are acquired. The buyer will also want to assess the transferability of clients to ensure that the new owner can maintain and grow the client base after the sale.
Financial statements: The buyer will review financial statements, including balance sheets, income statements, cash flow statements, and other financial metrics to assess the business’s financial performance and sustainability.
Risk management: Financial services businesses often face risks such as credit risk, market risk, and operational risk. The buyer will want to understand how the business identifies and manages these risks and the effectiveness of the risk management processes.
Staff retention: As mentioned earlier, retaining key staff members is critical to maintaining the value of the business. The buyer will want to understand how the business attracts, retains, and develops talent, and assess the potential impact of the sale on employees.
Get ready to sell
Perform analysis on your financial services business as if you were a prospective buyer.
Ask yourself the following questions:
- What are the risks of this business?
- What would a buyer be concerned about during due diligence?
- What can I do now before entering the market to minimise these risks?
- What is the financial performance of the business over the last three years? Are there any trends that indicate potential growth or decline in the future?
- What is the level of expertise and experience of the staff? Are there any key employees that are critical to the success of the business?
I speak to you in plain, jargon-free English as a friendly commercial business solicitor – and I will help you to sell your financial services business in the most hassle-free way possible.
Get in touch today to find out how we can work together.
Next Steps for your selling your financial services business?
Whether you are buying or selling a FCA regulated business, doing so as a share sale or an asset purchase, or you just don’t know – get in touch.
My typical client is probably like you – never bought or sold a business before – and so I’lll help you every step of the way.