More than three-quarters of practice owners consider finding the right cultural fit to be equally or even more important than obtaining the highest price when it comes to selling their financial planning business. According to a survey conducted by Centurion Partners, while many owners consider price to be the key driver for a successful sale, more than 78 per cent view other factors as being just as important. Top of the list is cultural fit, or the seller’s need to ensure the buyer will continue to deliver a similar standard of advice, service and client experience.

“We call it the ‘golf club’ test,” says Chris Wrightson, director of Centurion Partners. “It is the ability to see your former clients at the golf club and know they are being looked after in a manner you and they expected.” According to Wrightson, incorrect cultural fit, not price and terms, is often the real reason behind a failed business sale. After cultural fit and price, a third of owners surveyed identified ease of the sales process as the next most important factor.

Wayne Marsh, director of Centurion Partners, which recently created Centurion Market Makers, a marketplace for the sale of financial planning businesses, says the down market has not caused owners to delay their succession plans. “Logic says that value [of a business] goes down when the market comes off, [but] this presumes an investment-based value proposition,” he says. “If the business is broad-based, only a percentage [of the revenue] is impacted.” Recognising that it’s a low point in the cycle, Wrightson says some sellers have raised the prospect of deferred payments to capture some of the upside when markets recover.