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Business Development How to plan succession for your own business

How to plan succession for your own business

You should consider these four points to plan a succession of your business.
Riya Lakhmani Jul 27, 2018

For Mr. Jain, an IFA, it was just another regular day at work. In keeping with his morning ritual, he was checking mails. The first thing that grabbed his attention was a mail informing him about the sad demise of an acquaintance and fellow advisor. The mail had come from his friend’s office informing everyone that ‘ABC Advisory Services’ would no longer continue its operations owing to the demise of its founder.

This unexpected news shocked Jain to the bone. It made him realise, that though he had financially secured his family against such an event, he had failed to guard his business against this eventuality. Since Jain had built the business with a lot of efforts, he was not ready to accept that his years of hard work and sweat may go in vain. He decided to talk to fellow advisors to understand how he could secure his business against such sudden unexpected circumstances.

Here are the suggestions that he received from his peers. Knowing that others may be facing this dilemma, he decided to share his knowledge with us.

Pass it to the heir

Easiest way to continue your legacy if you are a solo advisor is to pass on the business to a family member.  If the family member is interested in your business, you must start his training early. This will help him understand business under your guidance.

To start with, you can ask him to accompany you to important client meetings and gradually start giving him  opportunity to manage clients independently.

Train your trusted employee

If you do not have an heir and still want to continue your legacy, you can groom a trusted member of the staff for the role. You first need to identify an employee in your firm who has the potential to sustain as well as grow the business. Work on the criteria based on which you are going to appoint a successor. If you do not have anyone who fulfils the criteria, you should start looking for new hire and train her accordingly.

Merge your business

A solo IFA can approach another IFA with similar business philosophy and ethics to merge their firms. This can help you share risk and profits with another IFA. However, before entering into the deal, you must have a clear understanding of all the terms and conditions outlining the contract. In this setup, you reduce your risk by 50% and have a back-up option to let your business flourish after your demise.

Sell your business

You can also sell your business to a company for an equity stake in the bigger business. Ensure that management has the ability to service your clients in the same manner as you.

You need to evaluate cash flows and revenue generation potential of your business for valuing it. Before cracking the deal, you should research and analyse the expected growth rate, NAV growth, addition of more money through clients and market regulations. Based on this analysis, you and buyer can negotiate the price for the deal.

It is important to remember that you too would have to work for some more years after selling the business to build synergy.

Click to clap
R K JAIN · 7 months ago
I want to sell my aum. How can I do
Praveen Sharma · 7 months ago
Call me on 9825406911
Nirav gala · 7 months ago
Call me on 09429387819 for a best offer
Mfinvest · 7 months ago
Please send a mail with AUM breakup and contact details at info@mfinvest.in
rakesh kumar singh · 7 months ago
Saibal biswas · 7 months ago
Whom should I chat for selling my business
Mfinvest · 7 months ago
Please send a mail with AUM breakup and contact details at info@mfinvest.in
Pramod kumar shukla · 7 months ago
Dear sir i am working with nj india invest pvt ltd .But I'm wants to work self. How to manage .

Rajeev · 7 months ago
You can take ARN on your name from Cams.You must be ARN holder.
SWAPAN DAS · 7 months ago
Pass it to the heir

"Easiest way to continue your legacy if you are a solo advisor is to pass on the business to a family member."

If I pass the business to my wife or daughter, will she continue to get trail Commission on my existing AUM?
RAGHUVEER · 5 months ago
As it is every amc is taking the nominee name. So as long as your Client is continuing with your ARN code the commission will come to the nominee incase of death of a IFA. But if any body wants to pass on the business to the wife or daughter or to firm, you should give a letter to the amc. your wife or daghter should write NISM exam and get ARN code. then all the invester under your ARN should give a notice from you end and also get their noc.
prasad Shetty · 7 months ago
If anyone interested in selling business
Drop message @9820613928
We will get in touch with you
RAGHUVEER · 5 months ago
after selling the business can we continue with you banner and get the profit sharing ?
Mukesh Chothani · 2 months ago
I m also interested to convert my business in to accommodate with new Partner n partly sale the AUM.. Or if any one interested entire AUM.. Ready.. If anyone interested please call or mail
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