Internal Succession: Is it a Reality for Your Wealth Management Practice?

Are you considering an internal succession plan for your wealth management practice? While it may sound like a straightforward solution, some key factors must be considered to ensure it can be a successful and viable option for your business.

Many founders assume that having a junior partner in the practice is enough to guarantee a smooth ownership transition due to their continuity with client relationships and business knowledge. However, the reality is that less than 25% of SkyView’s internal succession plan applications result in funding.

This highlights the importance of understanding the key factors that can affect the execution of your succession plan:

1. Net Worth and Experience

One crucial factor to consider is whether your internal partner has the necessary net worth and experience to qualify for bank financing.

2. Deal Structure

Once you have determined that your junior partner is qualified for financing, the next step is identifying a deal structure that meets the required cash flow to accommodate financing. The deal structure will impact the amount of financing you can secure and the terms and conditions of the loan.

3. Sale Price

Another important consideration when considering an internal succession is whether your sale price will be affected and by how much.

Next Steps

Before moving forward with your internal succession, it is crucial to determine if it is a realistic option for your practice and how you can reward your valued team advisors. SkyView Partners can assist you in reviewing your options for financing and deal structure design and help you make informed decisions that will benefit your business in the long run.

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