Internal vs. External Succession Planning
Evaluating the mechanics, tax implications, and timelines for selling internally to junior partners versus a third-party roll-up.
Transitioning ownership is the most complex transaction of an advisor's career. The choice between an internal sale to next-generation advisors and an external sale to an aggregator fundamentally alters the firm's legacy and valuation.
Internal Succession: The Financed Buyout
Internal sales typically require the founder to act as the bank. Junior partners rarely have the capital to fund a multi-million dollar buyout upfront. Instead, the transaction is structured as a seller-financed note over 5 to 7 years, paid out of the firm's ongoing cash flow.
Pros: Preserves culture, high client retention, founder maintains control during transition.
Cons: Lower overall valuation (often discounted 20-30% compared to external buyers), founder bears the default risk.