Buying a Client Book or Business – Which is Right For You?

 Scott Harris, National Practice Adviser, MLC Advice Partnerships
 

Consider your goals

When buying a book of clients or a complete business, both come with pros and cons, so you’ll need to consider which benefits match your goals for growing a thriving adviser business.

Buying a client book

There are certainly less loose ends involved when buying a client book, because you're not taking over all the trappings of a business - technology, assets, staff and the legal entity - so it's usually less complicated and a lower risk transaction.

Sounds like a win win? Well only if you can find a principal who's prepared to part with their client list for a fair price. Consideration also needs to be given to the tax liability for this type of transaction including GST, stamp duty and capital gains tax for the seller.

Buying into a business

Buying equity in a business, or taking over the whole kit and caboodle, can often bring more value, particularly when you're looking to expand into other regions or open a new office. You could be taking on staff, premises, technology and many other assets within the terms of the sale.

As well as assets, you're also inheriting all liabilities and potential risks. And those assets you're buying may also come with performance or legacy issues. If you haven't negotiated staff contracts, commercial leases and other agreements yourself, they may not suit your way of doing business.

Due diligence

And that's just why due diligence is so important. Only by conducting detailed research into every aspect of a transaction – financial, legal, compliance, tax liabilities and staffing - can you make any type of acquisition with confidence.

Making it work in the long term

Research and negotiation are just the beginning of making a success of your new acquisition. A change of management creates prime conditions for client drift. And if you want the outgoing principal to play a key role in the transition, you'll need a binding contract in place for this, plus any agreements on restraint of trade to avoid unwelcome competition in the future.

Partner with a licensee who has specialist services

With an MLC licensee you get access to a team of experts who provide support, advice and coaching in all areas of acquisition and transition. From sourcing opportunities in the market to arranging valuations, due diligence and finance right through to integration, the MLC team has the experience and expertise to help you succeed with your plans for growth.

MLC also provides access to the Connect for Growth team. Transacting on the open market can be complicated and time consuming, that's why most buyers and sellers choose to deal directly with MLC. As one of Australia's most experienced and largest buyers and sellers of client books, MLC can take away the hassle and manage the entire process for you, so you feel confident knowing that we will get the best possible outcome for you.

To find out more about MLC’s licensee options, visit the MLC website and speak to one of our Business Growth Specialists.

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