First-Time Buyer Series: Why Sell to You?

In last week’s post, Rookie Mistakes, #2, we discussed an example of how negotiating before you have all the facts can cost the advisor a lot of money, if not the entire acquisition. Today we consider why a Seller would pick you over other buyers.

Statistics vary, but some surveys indicate that there are as many as 50 buyers to every seller in certain market areas. Whatever the numbers are, it is clear that there are a lot more buyers than sellers. This creates an environment in which it is critical that you as a buyer demonstrate to a prospective seller that you are the person or group to answer three critical questions for any seller:

·        Will this buyer give me a reasonable price for my book of relationships?

·        Does he/she have the financial wherewithal to pay me?

·        Will I be proud to go to my clients, who are in many cases good friends or family, and tell them that this is the person I have chosen to take over the stewardship of their accounts?


On a basic level, if the prospective seller cannot be convinced to be comfortable with the answers to all of these questions, you will not have a legitimate shot at working something out.

Advisory firms are generally not purchased through a bidding process. It is more of a courting process. In many cases, the money is less important than the third question above. The clients of any seller are often longtime friends and even family. If you cannot build trust with the seller, he/she will never Close. In his book, The Speed of Trust, Stephen M.R. Covey talks about trust as being both veracity and competency. It takes both and you have to convince the seller that you are trustworthy.

The entire buying process is devoted to answering these questions, but it starts with the Value Proposition, (VP). You must build a VP that tells the seller why he/she should sell to you. The VP is a combination of your VP to clients plus elements to instill confidence in your stability and your ability to service clients in the manner that they have become accustomed. Your VP should support an acquisition that attracts your ideal acquisition. If you have 80 clients with $80 million under management, it is unlikely a seller will believe you have the infrastructure and resources to service 500 additional clients.

To develop the VP, be able to articulate:

·        How you will pay for the transaction

·        How the seller will get paid if you become disabled or die


·        How you and your team will be able to service significantly more clients

·        The background and qualifications of the key players in your firm

·        Your firm’s infrastructure

·        Your firm’s culture

·        Your firm’s technology and how you use it to service clients

·        The services you provide

·        Your investment philosophy

·        If you are managing assets in-house, your investment track record

·        Your continuity plan, in case something happens to you, (disability, death)

·        What makes your firm and you special?

Be sure that anyone who will have contact with potential sellers, be it members of your firm, or an outside consultant, has the elements of your VP down and can articulate them effectively. (By the way, your firm should have one point-person who coordinates all activities connected with a possible seller. More than one can often confuse a seller, and cause the seller to believe you are a dysfunctional group.)

You will be asking the seller to “open the kimono,” so that you can perform due diligence. You must be willing to do the same.

Be prepared to be diligent in your investigations, (discussed in a future post), but never forget that this, on a basic level will be a popularity contest. You are looking at this possible acquisition, but you are also auditioning. At the end of the day, it will often come down to whether the seller likes you more than another buyer.

Suppose there are two Chevrolet dealerships in your town and each wants the same amount of money for the car you want to buy. Who do you pick? Be that person for your seller.


As always, these articles are here to help First-Time Buyers on their path to buying books as well as helping sellers navigate a critical time in their life and career. If you have any questions, comments, or would like to dive into these topics in detail, feel free to email me here or find us on Facebook at Until next week!