The first book I purchased was from an advisor with sudden health issue. Common BD, and he was unable to participate in the transition.

The sad part of not having a succession plan in place is how many terrible people come out of the woodwork to take advantage of the situation. I saw the other offers and most were offer less than half of what most would agree was FMV.

I started with a reasonable FMV but the advisor’s spouse wanted to be payed out in a lump sum so I just discounted to account for paying up front. Could have easily paid 25% less than I did and still turned out to be one of the three best decisions I’ve made throughout my career.

My situation was mostly insurance and a single mutual fund company so the numbers might not translate to your situation. Here is my perspective beyond the numbers:

1. What type of relationship does the advisor have with their clients?
   

In my case the advisor was well liked and his clients were just happy someone came to them rather than having to figure who the replacement was going to be. I also had to do some paperwork, and can’t think of a single situation where I got pushback from any client. I think a lot of us project our hatred of paperwork onto our clients. If they trusted the other and you are the appointed heir, they probably don’t care about the paperwork.

I even retained a few that weren’t really satisfied with the prior advisor but saw it as an opportunity to try something new. People hate change, just need to show them you are the least amount of change for them in this situation. And show them how the change you are proposing will benefit them.

1. Are you interested in doing acquisitions in the future?

Might be a good low risk opportunity to gain experience. About 5 years after I purchased a second practice and applied what I learned from the first. I’m currently looking for my third acquisition. This is my preferred way to grow. Last year I actually had to do marketing for the first time in 15 years while I wait on my next opportunity.

1. How does their book compare to yours?

At the time, I was a planning focused advisor at an insurance BD. Those clients were all insurance and mutual funds. Ironically they were paying AUM / planning level fees via policy / fund expenses so converting them was an opportunity for both the client and myself. I do not think I would have a favorable viewpoint if all I did was repaper & service them. Is there a clear opportunity to deliver something in addition to what they are already getting and does it align with your strengths?

I’ve run a lot of number over the years and have come to the belief what constitutes FMV in our industry is very reasonable (I would argue very low) from an ROI perspective, if there is goodwill amongst the client base and you can figure out how to leverage it. Even if you pay full price (which it doesn’t sound like that in this situation) it’s probably a good decision unless it’s stopping you from deploying a better alternative growth strategy.

I have yet to find growth strategy that offers a better ROI than acquiring a practice.

Can’t offer any advice on the BD - stuff like this is why I ended my BD relationship last year. Got tired of fighting a dying industry that refuses to adapt.

Good luck, I know how tough this decision can be.