During the last few years, more than a third of Catalyst Partners’ new clients have attempted to sell their firms before they appoint us to assist them.

When I ask about what happened there are a number of recurring reasons why the sales failed to take place; some of these could, with a different approach, have been mitigated or avoided.

I am fond of alliteration, so here are “The 10 Rules for Sellers” to act as an aide memoire.

To be “sale ready,” there are key elements that must have been fully addressed. They include having comprehensive data; that used to be mainly financial but the focus on client reviews is an area that all acquirers will want detailed information because of the level of scrutiny by the Financial Conduct Authority (FCA).

Other areas include ensuring that the statutory books and accounts are up to date, as well as employment and property contracts. A lack of preparation will put off many acquirers, so it is important to make a good first impression.

Once the sale process has started it is important to respond to requests for information quickly and carefully. Sellers still have their businesses to run, but acquirers now have more choice in who they acquire so keeping their interest is a priority.

It follows on from the last point that sellers need to have the right level of resources in place be that legal, tax, accounting, and also corporate advice, so that a seller has a point of reference and support as the deal progresses. External resources all have a cost, but, if they enable a sale to be completed, and on good terms, then the costs will have paid for themselves and help mitigate the likelihood of poor decisions leading to poor outcomes.

Always check the accuracy and relevance of the data you supply before it is sent. Treat information requests from acquirers as you would an examination question. Ensure that you fully understand what information is being requested, and then answer the question(s) asked, and avoid the temptation to provide additional information. Use your professional advisers to assist you if you are unsure.

Do not rely on recall when talking to acquirers or their advisers. It is always best when you either do not know or are not sure of the answer, to say so and to agree to obtain the answer(s) rather than to guess.

No matter how friendly a potential acquirer is, always consider what you say and the impression it may give them. Reminiscing is something most of us like to do but think before you relate what to you may be amusing anecdotes as the people you are talking to, may not see what you are saying in the same light.

Be polite about people or organisations that you know when asked; the adage: “If you cannot say something good, don’t say anything” is a good one to abide by. In particular, whilst most people will have a view of the FCA and other regulators, they may not be the same as yours, and you need to avoid any impression that you and your business are contemptuous of regulation.

The sale process is a two-way process. Whilst you will be asked by an acquirer to supply copious amounts of data to support their due diligence, you should also ask whatever questions are important to you. You can look to your professional advisers, in particular your corporate advisers, to help you.

Unfortunately, not all sale negotiations result in a completed transaction, and so sellers need to factor in the possibility by ensuring that their business continues to be able to trade effectively whilst the sale process takes place.

Whilst there continues to be an active market for vendors if they are ready to sell their businesses, the current environment is no longer a sellers’ market as it was up to the end of 2022.

Acquirers will now ask more questions from the outset and as I have already set out above, sellers need to be better prepared. Valuations are still attractive for professionally managed firms, but the assembling of data and how it is conveyed to make the right impression, has become even more important than ever.

In summary, the sale of a financial planning business is all about preparation, and execution. It is a complex process which the owners of most financial planning firms have not usually done before and is likely to be the largest financial transaction of their lives.

Therefore, identifying the assistance needed before beginning the process, and having experienced advisers in support, will significantly increase the likelihood of a successful outcome.