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Sub $1m Investment Advisor Brings In $5.1m All In Offer

Practice Background

Our client is a 38 year old sole practitioner who has one full time staff person. They are fee based, financial planning focused with over 90% of their clients having gone through the planning process at least once. Over 85% of their revenue comes from advisory fee's with the differential from insurance and annuities. They are growing top line revenue at a 15% annual compound rate. Our client also has experience in leading others which they would like to continue.

The client's goals are:

  • To have the necessary capital to grow organically

  • To work at least another 20 years

  • To potentially partner with another growing firm where there could by synergies

  • To take advantage of today's multiples

Client Objective

Top line revenue - $724,000

Annual expenses not including owners comp - $250,000

EBITA - $300,000

AUM - $92m

# of clients - 120

Key Data

Offer is for a W2 model plus merging with another firm with complementary talent.

Headline Price - $5.1m

Paid at closing - $1.5m

End of year 1 projected growth bonus (21% growth)- $656k
End of year 2 projected growth bonus (10% growth) - $722k >br>End of year 3 projected growth bonus (10% growth)- $529k
End of year 4 projected growth bonus (10% growth)- $582k

Total upfront plus projected growth earnouts = $4m with the option to take upwards of 10% in PE firm's stock

Base compensation - $250k/year with recalculation at the end of year 4

Incentive compensation based on additional growth of new partner firm:

  • Year 1 - $15k

  • Year 2 - $31k

  • Year 3 - $48k

  • Year 4 - $67k

Cumulative multiple of current revenue - 7.5x

Cumulative multiple of current EBITA - 18.9X

All-In Offer* Highlights

*An All-In Offer includes any money paid upfront, signing bonus, salary and potential earn-outs based on growth. It does not include retirement or overrides on production. Assumes you hit all required transition, retention and growth expectations.

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