Is Your Financial Planning Practice Ready to Sell?

Prepare three years of profit and loss statements, balance sheets, and cash flow statements that clearly separate personal expenses from business operations. Buyers and their accountants will add back owner perks, but unexplained or commingled expenses create doubt and slow due diligence. Engage a CPA familiar with RIA financials to produce reviewed or compiled statements at minimum.

Create a detailed AUM schedule broken down by individual client, identifying whether each relationship is billed on an AUM percentage, flat retainer, or commission basis. Include custodian (e.g., Schwab, Fidelity, Pershing) and trailing 12-month revenue per client. Buyers need to verify that 70%+ of your revenue is recurring before underwriting a full valuation multiple.

Run a full BrokerCheck and SEC IAPD report on yourself and any registered staff. Identify any disclosures, customer complaints, regulatory actions, or arbitration history. Buyers will do this on day one of due diligence — it is better to understand what they will see and prepare context or resolution documentation in advance than to be surprised mid-process.

Identify which client relationships are tied exclusively to you as the individual advisor versus those that have meaningful touchpoints with staff, associate advisors, or documented planning processes. Personal goodwill is difficult to transfer and reduces buyer confidence. Begin introducing clients to associate advisors or team members who can maintain continuity post-sale.

Build a report segmenting your client base by age, AUM tier, annual revenue generated, tenure with the firm, service frequency, and household complexity. Buyers are highly sensitive to average client age — a practice with a client base averaging 72+ years old carries meaningful attrition risk. Younger or multigenerational client households significantly improve valuation and earnout outcomes.

Review every client investment advisory agreement to confirm it contains assignment clauses — or identify which agreements require affirmative client consent upon a change of control. Coordinate with your compliance counsel to understand custodian notification requirements and whether a bulk consent process is available. Surprises here during closing can delay or derail transactions.

Buyers pay a premium for practices where client relationships are shared across a team rather than concentrated in the founding advisor. Identify associate advisors or client service staff who have direct client relationships, ensure they have appropriate licensing and credentials, and consider incentive structures — including phantom equity or stay bonuses — to retain them through and beyond the sale process.

Document all technology platforms in use, including your CRM (e.g., Redtail, Wealthbox, Salesforce), financial planning software (e.g., eMoney, MoneyGuidePro, RightCapital), portfolio management tools, and custodian portals. Confirm licensing and subscription terms, identify transferability, and ensure your CRM data is clean, complete, and consistently maintained. Buyers integrating your book into their platform need to assess technology migration complexity.

Review and update your Form ADV to ensure accuracy in AUM reporting, service descriptions, fee schedules, and conflicts of interest disclosures. Buyers will scrutinize the ADV as a primary diligence document. An outdated or inconsistent ADV raises questions about compliance culture and can signal risk that depresses valuation offers.

Retain a sell-side M&A advisor or investment banker with specific experience in financial planning practice and RIA transactions. They will help you identify the right buyer type — whether a PE-backed consolidator, an ensemble RIA, or an individual advisor — prepare your confidential information memorandum (CIM), and run a structured process to generate competitive offers.

Engage an attorney with RIA M&A experience to advise on non-compete scope, duration, and geographic limitations, as well as non-solicitation provisions covering both clients and staff. These terms directly affect your personal freedom post-sale and are heavily negotiated. Understand your state's enforceability standards before agreeing to any terms in a letter of intent.

Draft a written transition plan that outlines how clients will be introduced to the acquiring firm, how communications will be sequenced and personalized, and how staff will be retained and integrated. Buyers — especially consolidators paying earnouts tied to client retention — will want to see a thoughtful, advisor-led transition strategy before finalizing deal terms.

Work with your CPA or M&A advisor to prepare a normalized EBITDA schedule that adds back one-time expenses, owner compensation above market replacement cost, personal vehicle use, personal insurance, family payroll, and other personal benefits run through the practice. This recast EBITDA is the figure buyers will apply their multiple to — maximizing it through proper normalization is essential.

Document your centers of influence (COIs) — CPAs, estate attorneys, mortgage brokers, and other referral partners — including the history of introductions generated, communication cadence, and the nature of each relationship. Buyers and consolidators value practices embedded in strong local referral networks because it signals future organic growth potential beyond the existing book.