Rob Stevenson: Building Enterprise Value in Financial Planning Businesses


For many financial planning business owners, the hope is that one day, they’ll be in a position to cash in on their lives’ work by selling their firms. However, with vast majority of firms heavily reliant on the owners, this may be more challenging that many think.

In this video, Rob Stevenson of Kingmakers speaks to Adviser Hangout host Abraham Okusanya about the how to build realisable value in financial planning businesses. Rob recently published a whitepaper titled Creating sustainable growth and realisable enterprise value in financial planning businesses.

Rob knows an awful lot about this stuff; he has undertaken over 200 due diligence exercises and completed 34 M&A deals, ranging from the purchase of modest practices as the owners retire, to complex private equity funded arrangements. He has created and delivered consulting solutions to over 50 firms, continuing to advise the boards of many of those firms today. So it’s fair to say that he knows this market.

Rob notes that ‘

 In other words, what is not transferable is not sellable.

Rob came up with a formula to help practice owners make good decisions as they scale their businesses. The EV formula is designed to be used on an ongoing basis in making decisions about growing and scaling a planning firm i.e ‘is this decision improving our viability as a business or damaging it?’

Enterprise Value =

EV Formular

A key factor in the equation is what Rob refers to as the ‘owner’s capacity for self sabotage’. He says example of this is where a business has a great strategy and everybody is trucking along but somewhere along the line, the owner decides to change the strategy for reasons that are not apparent to anybody else. Or where there are multiple owners within the business and they have differences of opinion and they can’t agree on where to take the business.

You can listen to the extended interview in this podcast session here; Rob also explored the idea of what a scalable and subscale financial planning businesses look like. He notes that, generally speaking financial planning get somewhere between £750K – £1.5M of turnover and the owners of the business have multiple roles as owner/manager/adviser – the firm finds it difficult to break through to the next stage.

We also talked about how financial planning business owners can go about making advisers and support staffs within the business real stakeholders, which helps to strengthen and accelerate growth.

Abraham Okusanya
Abraham is the founder of FinalytiQ, a research consultancy for platforms, asset managers, and advisory firms. Recognised as one of the country’s leading experts in retirement income, platforms and investment propositions, Abraham has authored several papers on these subjects and delivered talks to the Personal Finance Society, The FCA and several conferences across the country.

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