Business Transition: How to Value Your Financial Planning Practice

Pollock, Stanley L.
June 1998
Journal of Financial Planning;Jun98, Vol. 11 Issue 3, p64
Academic Journal
This article attempts to determine reasons for and the necessity of having a realistic valuation performed preparatory to a smooth transition. Comprehensive financial planning for business owners and professionals includes attentive strategies for exiting from a business or practice. Financial planning practices (FPP) are unique. FPP generally have substantial value today, as of June 1998. Healthy, active firms are being acquired, others are or will be involved in various transitions for sundry reasons. Smooth transitions, however, require considerable time to complete. Financial advisors and planners advise their clients to plan for and into the future, including business transitions. The same individuals have to plan for their own futures. It is possible that FPP could be the largest single asset on the balance sheet of an advisor. A great deal is at mistake. Nowhere is one more important than in developing buy-sell agreements. It is crucial that you comprehend the concept and process and not the ultra-concerned with the illustrations. Revenue Ruling 59-60 sums it up with, a sound valuation will be based upon all of the relevant facts, but the elements of common sense, informed judgment and reasonableness must enter into the process of weighing those facts and determining their aggregate significance.


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