These are the ground rules I would recommend you start with.
No. 1 - Set a “Can’t Say No” Amount
Everyone has a number, right? While that offer you can’t refuse might be different for each partner, it’s possible to come to a middle ground of agreement.
Talk about what kind of offer might be acceptable to you both. If you then receive an offer above that amount, it’s agreed that you’ll both sign off on it, even if one of the partners isn’t officially yet ready to sell.
By coming to this agreement early on, and before you’re in a live situation, you can defuse much of the emotions involved in an acquisition because you’ve already made the decision.
No. 2 - Choose a Tiebreaker
When no partner has a majority, you must agree to a tiebreaker to help you settle the score if an acquisition offer does come to you and you can’t come to an agreement.
If your firm is large enough to have a board of directors, their voices should play a role in your decision, and you can lean on one of your board members to give you both clarity and objective advice on what to do. If you still can’t decide, they can act as that tiebreaker vote too.
You can also bring in a professional attorney or mediator as a neutral third party, with whom no one has a prior relationship. While this can make the event feel like a separation or divorce, it doesn’t have to be a bad scenario.
A professional can help you engage in conversations about what you each want, and help you identify those wants if you don’t already know them.
No. 3 - Agree on Exit for an Older Partner
The final ground rule I’ll offer is for firms where one partner may be older and more ready to retire than the other partner. And while the average age for RIA owners has gone down to under 50 years old on average, it’s not an uncommon situation for an older advisor to bring in a younger advisor as part of their retirement plan.
Selling may not be what these partners need to talk about; instead, they may need to decide and set steps for the older partner to retire.
It’s not a dissimilar process to coming to an agreement for selling, but it presents its own set of challenges that can be tackled much more easily when covered upfront and before the retirement date is imminent.
Know Your Motivation
Knowing when or when to not sell your firm is all about understanding the motivation behind the action. If you weren’t previously thinking of selling, but now you have sudden interest, take time to analyze your emotions and be open to deep conversations with your business partner.
One last tip: When considering a sale, go to the market and see what interest there might be in your firm instead of looking at only one offer. Each organization is different and made up of different people. The last thing you want is to end up getting in bed with an organization that offers a bad culture fit.
Selling your firm can be a thrilling experience, or it can be one of the worst decisions of your life. The difference is in your ability to have hard conversations, and plan ahead of time to knock out some of the more difficult decisions before they come knocking at your door.
Ryan Shanks is CEO of FA Match