What actually happensin an IFA sale process.

THE ADVICE FIRM BLUEPRINT

Most IFA founders who sell their firm do it once. That is the whole problem with how this subject gets discussed. Buyers run process after process; sellers run one, ever, and are expected to negotiate against people who have done it fifty times. In earlier editions of The Advice Firm Blueprint we covered the things that determine what your firm is worth and how ready it is to sell. This article starts a different conversation: once you decide to go, what actually happens, in what order, and where founders get caught out.

Stage one: preparation, before anyone sees a data room

A sale process does not start with a call from a buyer. It starts months if not years earlier, with the seller getting the business into a state where scrutiny does not find anything unexpected. This is where the work from the last ten editions pays off: management information that stands up, clarity on who the clients actually belong to, a compliance file that will not embarrass anyone, and growth that can be explained rather than just reported. Buyers discount for uncertainty. Every question they have to ask twice reduces the number they eventually write down.

Stage two: positioning and the information memorandum

Whether you run this yourself, through a corporate finance adviser, or a firm like mine, the seller side needs a document that tells the story of the business: revenue quality, client demographics, adviser structure, growth trajectory, and why now is the right time to buy. This is not marketing copy. Serious acquirers in this space read past the gloss straight to the numbers, so the document earns credibility by being precise rather than by being persuasive.

Stage three: initial approaches and indicative offers

Interested parties respond with a non-binding indicative offer, usually expressed as a multiple of recurring revenue or EBITDA, sometimes both. At this stage the number matters less than the structure attached to it: how much is paid on completion, how much is deferred, how much sits in an earn-out, and what conditions the earn-out carries. A founder who focuses only on the headline multiple at this stage is negotiating the wrong thing first.

Stage four: exclusivity and heads of terms

The seller picks a preferred bidder and grants a period of exclusivity, formalised in heads of terms. This document is not legally binding on price, but it sets the framework everything else gets negotiated inside, so vague or generous heads of terms tend to cost sellers leverage later. Once exclusivity is signed, the buyer's ability to walk away, or to renegotiate downward, increases sharply, because the seller has stopped talking to anyone else.

Stage five: due diligence

This is where deals are actually won or lost. Financial due diligence tests the numbers in the information memorandum. Legal due diligence checks client agreements, employment contracts, leases, and any historical liabilities. Regulatory due diligence, which carries particular weight for advice firms, looks at complaints history, file quality, and whether advice given historically would stand up to an FCA review today. Anything found here that was not disclosed earlier does not just get negotiated, it damages trust for the rest of the process.

Stage six: the sale and purchase agreement

The SPA is where the commercial deal becomes a legal one. This is where warranties, indemnities, restrictive covenants, and earn-out mechanics get drafted in detail. Founders who skim this stage because they are tired of the process by this point are the ones who discover, eighteen months later, that an earn-out clause they did not read closely enough gave the buyer more discretion than they realised.

Stage seven: completion and integration

Completion is a legal event, not the end of the founder's involvement in most structures. Deferred consideration and earn-outs typically tie the founder in for one to three years post-completion, with performance conditions that are meant to protect the buyer's investment. How that transition period is defined in the SPA, not how it is described verbally during negotiations, is what determines whether the founder actually receives the full consideration they agreed to on paper.

The pattern worth remembering

Every stage of this process rewards preparation and punishes founders who treat it as a single negotiation over price. It is a sequence of separate negotiations, each with its own leverage point, and the leverage moves steadily from seller to buyer as the process progresses. The work covered in earlier editions of The Advice Firm Blueprint, on MI quality, key person risk, client concentration, compliance file quality, and growth attribution, exists precisely because it strengthens the seller's position before that leverage shift happens.