For anyone trying to sell or buy a financial-advisory business, the marketplace can be a hazy place to navigate.

Because the terms of most deals are hush-hush, trying to slap a price tag on a business sometimes comes down to guesswork and instinct. For sellers, the big concern is getting true value for the business. And for buyers, just finding the right business to bid on can be a sizable hurdle.

"Most practice transitions that have taken place have been behind closed doors," says David K. Goad, CEO of FPtransitions. Goad, however, thinks the market's door has opened at least a crack as a result of data compiled by his company. FPtransitions runs a Web site in which buyers and sellers of financial-advisory businesses can display listings and, they hope, find someone with whom to make a deal.

By compiling data from the listings of about 300 prospective buyers and 100 sellers in 2000, FPtransitions has churned out the "Practice Transitions Report," which tries to get a grip on what it is that creates value in the advisory-practices marketplace.

Among the broad trends highlighted are that fee-based practices in an urban setting-usually in the Northeast, Southeast or Southwest-were valued most by buyers. The report also says practices that have developed a niche specialty, either in clientele or services offered, have a greater chance of finding a buyer. Buyers also expressed a preference for practices with between 50 and 200 clients and a client base with an age demographic of between 41 and 60 years old.

For sellers, the data provides a crucial key for preparing a practice for the market: a profile of what sellers want, says Mark C. Tibergien, principal of Moss Adams LLP, a transaction-consulting business and one of FPtransitions' strategic partners. "If you're a seller, what it tends to validate is that there are certain buyers who are willing to pay a premium in order to build their practices."

The numbers do come with a few disclaimers, particularly those dealing directly with practice value, which are described as guides because they primarily are based on list prices and data from about 35 completed transactions, involving more than $1 billion in assets, in which FPtransitions played a role. This means prices used for the report may be a bit inflated, Tibergien says.

He notes his firm found the typical practice sells for around 1.0 to 1.3 times gross revenues. The report, meanwhile, lists regional asking price-to-revenue ratios that range from 1.55 in the Northcentral United States to 1.86 in the Southwest. "What is not clear from the data is how the terms of the deals may have impacted the net worth," he says.

Goad, however, maintains that the asking price has generally held firm in transactions in which FPtransitions has been involved.

Some of the trends identified in the report could already be changing, Goad says. The downturn in the stock market, for example, has shrunk assets and revenues at many firms-a fact reflected in the lower revenues that were seen in listings in the latter half of last year, he says.