Navigating 'Client Concentration Risk' in a Sale
Selling one’s firm is like entering a marriage, pointed out Stuart Silverman, president of Bluespring Wealth Partners, based in Austin, TX. And Silverman should know. He sold his firm Fusion Advisor Network to Kestra Financial in 2012, which owns Bluespring, and has stayed on. “This is their baby,” Silverman, based in Tarrytown, N.Y., noted. “They care about their client, their employees and their legacy.” Making sure the business models mesh and the seller can maintain his/her secret sauce and entrepreneurial outlook are also critical to ensure that there’s a cultural fit between buyer and seller. “If the seller can’t see themselves working with these people and take that leap of faith, no matter how profitable, we advise waiting,” Silverman stated. When Bluespring Wealth Partners looks to acquire a firm, it dissects their client base. It scrutinizes their top 20 clients to determine the value of their assets, how old they are, how long they’ve been a client, how diverse they are in terms of client base and geography. Are most clients related to one family?
RIA Intel, June 1, 2020