VALUATION GUIDE
Valuing an IFA firm for acquisition
The headline multiple is only the start. The quality, durability and transferability of earnings—and the way consideration is structured—determine what the business is really worth to a buyer.
A practical framework for value
Build the valuation from the underlying economics and risks of the target, then test whether the proposed deal structure protects the buyer if performance changes.
Start with quality of recurring revenue
Assess client tenure, service proposition, fee basis, age profile, attrition and the proportion of revenue that can transfer reliably.
Normalise maintainable earnings
Adjust owner remuneration, one-off costs, underinvestment and acquisition synergies carefully. Avoid paying today for improvements the buyer still has to deliver.
Adjust for client and adviser concentration
A small number of relationships can create disproportionate risk. Understand who owns those relationships and what happens after completion.
Price and deal structure are inseparable
Deferred consideration, earn-outs, retention conditions and completion accounts can change risk-adjusted value even when the headline price is unchanged.
Questions to test the valuation
What must remain true for the price to work? Which assumptions are evidence-based? Where should risk sit between buyer and seller?
Pressure-test the valuation before you commit.
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