Get your practice management systems into shape
Bear in mind too that the process of preparing the business for sale may well highlight issues that need addressing. This could range from improving the physical property of the business to enhancing the efficiency of the technology ecosystem.
Would-be buyers will invariably want to see certain data as part of their due diligence process. The extent to which a firm has a technology system embedded into the business to help manage its practice management processes is seen by acquirers as a useful marker to evidence audit trails and compliance reporting.
A firm’s ability to deliver consistent, compliant outcomes through effective use of technology is a vital part of the acquisition due diligence process. If the buying firm believes it needs to make significant changes to advice processes or ongoing client relationships, for instance, it may want that work reflected in the price paid.
They will also take an interest in how clean the data is, especially if they would be looking to migrate data in the most timely and cost-efficient manner further down the line. Any incomplete data, or issues in being able to access and/or provide that information, would inevitably affect their view of the business.
Speaking at the recent Intelliflo Connected conference, Roderic Rennison, of Catalyst Partners, used the example of incomplete defined benefit pension transfer information.
He said: “I've been dealing with a business where, partly because of lockdown, partly because of other issues, the information on the DB transfers wasn't available for up to three months and the buyer lost confidence in that period. And that affected: A) the outcome and B) the value.”
He added: “You need to be able to access information that it would be expected you can provide, particularly around distribution of funds between different platforms, DFMs and so on.”
Acquirers expect firms to hold (and be able to easily access) up-to-date information from board minutes, governance documents and terms and conditions to management accounts and client segmentation processes.
The tech ecosystem as a selling point
Much of this comes down to how well the firm’s systems are working, including practice management solutions, and the firm’s ability to maximise the benefits of the technology at its disposal. Acquiring firms may be interested in Intelliflo’s eAdviser Index, which measures our customers’ business metrics against their use of Intelliflo office.
