JPTD consults on a $5.1m all-in offer* for a $724k Investment Advisor
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
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