Yes in my opinion. Management buy-outs (MBOs) can work fantastically well in this sector and potentially minimise disruption. The ongoing nature of client relationships mean that in many ways wealth management businesses lend themselves to internal succession.
Key considerations with an MBO as a succession planning tool:
- Understand the valuation and what will be sustainable for all parties.
- Over what period will the sellers be willing to receive the consideration?
- Consider the skills, risk appetite, strengths and any weaknesses of the management team. And, are there any gaps that need to be plugged?
- Decide on that team, and the effect on those not in it.
- What continuing seller involvement is needed (or wanted)?
- Think about other options, including an Employee Ownership Trust.
- How would a transaction be funded?
- Take good advice from experienced advisors who know the sector.
- Timing is key. Decide when to have the relevant conversations.
We’re also seeing more of this type of transaction and we expect that to continue.
More and more firm owners are now considering a Management Buyout (MBO) as a succession route, enabling them to exit on their terms while preserving the firm’s culture and client service.
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