David Canter, executive vice president at Fidelity Institutional Wealth Services and head of Fidelity's Practice Management and Consulting organization, Frank Kettle, managing director of Colchester Partners and Dan Silver, co-founder and president of Advisor Investments, spoke on a panel at Fidelity's Inside track event in Boston.

Here are ten tips they shared:
1.    Hidden sellers - Nobody is officially for sale until the organization is sold.  That is because it is not good for business to advertise you might not be servicing your own clients in the future.  With that said, there are more and more deals in the works, as things have rebounded from the slowdown in previous years because of the sharp market drop.

2.    Supply and demand - A common belief is that there are more buyers than sellers, but this is not necessarily the case, as demographics show most owners are getting closer to retirement.  Soon those potential buyers will be sellers and the scales will be in favor of the buyer.  Another factor is that smaller firms are caving to regulatory pressures and are exiting the industry.  Other players on the buying side are consolidators, roll ups, banks trying to expand and private equity firms.

3.    Deal structures - There are different ways to price out an organization, but typically the seller gets no more than 70% and no less than 51% up front.  The more money that is put up front, the more likely a seller will be motivated to make the transaction.  The rest of the payment is through an earn out that typically runs from two to three years.  If the firm continues to grow, the multiples can be higher. If a buyer is not going to acquire staff and will have to do all the work to service and keep the clients, the price will likely be impacted.  On the institutional side performance track records are more important.  On the wealth management side, client service is more important.

4.    A strategy - Firms looking to buy a practice should know why it makes sense before they move forward.  This is a good time to do an internal reflection.  Buyers should ask, "Are they going to add value to your business?"  They should know their strengths and weaknesses, so they can find a firm that compliments them.  For example, some people are good at managing the money, while some are great at bringing in the money.  If an organization just wants the clients, but not the personnel, they should not be looking at firms with young owners, as those people will probably want to be involved.  Geographic expansion is sometimes a reason to look, as buying a practice is a great way to accomplish this.

5.    Persistence - A catcher chases foul balls because he knows he will eventually catch one.  Advisors need to do the same thing when looking for organizations to acquire, as they will not all work out.  Sometimes you need to kiss a lot of frogs to find a prince.  Shopping around can help accomplish a part of the due diligence.  One can look at ADVs and tell which organization will likely sell within five years.

6.    Patience - The deal cycle has lengthened.  It used to be four to five months, but now that has lengthened to six to seven months. Plus, advisors really need 60 days on top of that to get clients' consent.

7.    Human capital - Assets under management are not the only thing to bring over.  Key staff should be considered as another big asset.  If staff will be retained, be careful not to write the big check and then go in and tell everyone how to do their jobs.  That can backfire and the purpose of the deal can be wasted.

8.    Lunch meetings - Advisors need to ask, who are they potentially going to call on?  Then they need to proactively get out there and look.  A great way to start a dialogue about buying or selling a practice is to go to lunch and just get to know each other, including more about each other's firms. 

9.    Internal successors - A firm is worth more to the individuals that already work within the firm, as they know the organization and the client relationships.  Plus, it is how they make their living.   If this is the route an owner wants to go, the right people should be hired and retained.  One caution is that a firm's staff might not be entrepreneurial enough, as they probably have only been employees throughout their careers.