If the thought of retiring has become a constant itch that nothing but permanent time away from the office can scratch, your wish may be easier to grant than you imagined. After long years of failed expectations of merger and acquisition activity in the planning industry, factors are finally falling into place that will drive planning firm sales. That's according to Chip Roame, the managing principal of consulting and research firm Tiburon Strategic Advisors LLC in Tiburon, Calif., who told advisors at the Financial Advisor Symposium in Chicago from September 12-14 that the time is finally ripe for a vibrant advisor M&A market.

Planner demographics are the main M&A drivers. "The average advisor is 60 years old and they have to do something," says Roame. That something is retirement. Forty percent of planners surveyed by Roame's company say they plan to retire in the next one to 15 years. He's predicting that half of the industry, including 70,000 independent advisors, will turn over in the next decade alone.

"Aging advisors, new larger competitors including banks and CPA firms and the emergence of knowledgeable consultants and real marketplaces will drive this market," Roame told Financial Advisor Magazine. More than 300 planning shops have already changed hands in just the past three years, thanks in part to the creation of brokerage and matchmaker services such as FPtransitions, National Financial Partners, Moss Adams and iValue. FPtransitions alone has facilitated 137 sales, with NFP racking up 100 deals in the past three years. That trend will escalate as a smarter, better breed of acquirer steps up to the plate.

That buyer will probably not be the financial or hybrid buyers that have gotten so much unfulfilled media hype in the past decade. In fact, the current flurry of sales activity comes after years of broken promises from these types of buyers. The landscape is littered with the missed acquisition attempts of financial buyers (also called roll-up firms) like Investment Advisor Group, Assante and Investment Managers Inc.

In most cases, these firms never created a strategy that had any legitimate synergies with the planning shops they were trying to buy. Their primary interest was rolling up a number of acquisitions to create a big planning firm they could then take public or sell. No transactions ever materialized. "They didn't know a thing about the advisor business, so they never managed to do a deal," says Roame.

At the same time, other would-be acquirers who have failures in their past may be getting smarter, he says. These include hybrid buyers such as Evensky, Katz & Brown, based in Coral Gables, Fla. The company failed to raise enough venture capital or acquire any firms in its recent bid to create a national planning company it could take public. But after the departure of a partner and the hiring of a high-visibility CEO, the firm says it is still looking for strategic and financial partners. It may still materialize as an acquirer, though probably one that is smaller in scale.

Although both types of acquirers caught the attention of many advisors lured by visions of lucrative IPOs, neither is likely to acquire your firm.

Who, then, is your most likely buyer? Other advisory firms. They account for 60% of recent sales, Roame says. Finding them can take some finesse if you go it alone. But you can get help from successful business brokers such as FPtransitions, broker-dealer matchmaking services like those offered by American Express and even value-added matchmaking programs at mutual fund companies like Alliance Capital and Putnam Investments. Roame suggests doing a cost-benefit analysis of what you'll get and what you'll give up if you hire a matchmaker. Brokerage and mutual fund companies' services may be free because they really want to retain your firm's business, but matchmakers like FPtransitions charge as much as a 10% commission.

Finding a match is the foundation of a happy and lucrative deal. It's also the key to creating operating synergies, which Roame says make or break acquisitions negotiations.

The same can be said for strategic or systematic buyers, which include banks and CPA firms. They have both the capital and the strategic need for the type of distribution that planning firms can provide. This type of buyer has accounted for about 15% of the 300 sales that have taken place in the past three years, FPtransition's David Goad reports.

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