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.
Client Objective
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
Key Data
Top line revenue - $724,000
Annual expenses not including owners comp - $250,000
EBITA - $300,000
AUM - $92m
# of clients - 120
All-In Offer* Highlights
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
*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.