Park Your Ego! Selling a Firm from the Owner’s Perspective

Posted By on Aug 8, 2016|1 comment


Selling a business is an emotional decision that takes a great deal of preparation. For Greg Seal of Seal Financial Services, closing the door on being a business owner was only the beginning. Greg recently celebrated his one-year anniversary since selling his firm in February of 2015. In the last 12 months, he has learned a thing or two.

His decision to sell the 31-year old firm was an emotional one that involved giving up his authoritative position as president of the company. For Greg, transitioning from owning and operating a successful firm for more than 30 years to becoming an employee required a great deal of time to comprehend. His first reality check came when he was asked to write a personal performance review. “This was the first review I ever had to compose,” stated Greg. “All of a sudden, your employees no longer look at you as the decision maker, which can be challenging when you are used to having the final say.”

In addition, Greg realized the importance of smart negotiating during the sales process. Sellers should have an idea of what they expect to achieve and what is most important to them prior to selling their business. Part of the negotiating process involves having flexibility and the ability to collaborate and park your ego at the door.

Identifying Your Market

After making the decision to sell his firm, Greg was faced with another challenge. He had to determine whether he was going to internally sell the firm or seek a buyer from outside the practice. In order to maximize the value of his company, he had to line up his business for sale, which meant assessing and organizing financials. This included completing a U4 (a government document that informs clients of advisor backgrounds, work history and any legal actions or lawsuit against them (fortunately there were none), ensuring discretion on assets (advisors have sole rights to make changes on their clients’ behalf), and consolidating investments into manageable groups. Greg started out with 400 mutual funds and 50 ETFs, all of which needed to be condensed into models and manageable assets.

When Greg decided to put Seal Financial Services up for sale in 2013, revenue for the business was over $1 million. To prepare the company for the purchase, Greg and his business partner, Janet McCoy connected with FP Transitions, a firm that specializes in helping financial advisors sell their business. Although the company was helpful in evaluating the firm over several years, Greg and Janet instead chose David Grow JR at Succession Resource Group (SRG), as the firm had a more concrete understanding of the compensation model of advisors and the process of selling. Within days of closing the sale, Janet sensed that the potential buyer was an incorrect fit, and she and Greg walked away from the deal.

After deciding against selling to the original firm, Greg and Janet took a month to realign their focus by creating a questionnaire and distributing to firms that inquired through Seal Financial Service’s centers of influence, including Schwab, T. D. Ameritrade, various mutual fund vendors and other SRG buyer contacts.

If at First You Don’t Succeed…

It wasn’t until the second time around that Greg and Janet began to feel wiser about the transaction process. Walking away from the first potential buyer allowed them to identify what it was that they really wanted and what traits they should be looking for in a buyer. When it came time to relist the business, Greg and Janet spent hundreds of hours researching and strengthening the company for a sale, which included sending out pre-letters to help prepare potential buyers for the transaction process.

Having a clearer focus and a better understanding of the sales process, Greg and Janet eventually sold the company to SRS Capital Advisors, Inc. To date, the total assets of the combined firm are more than $400 million in total with clients not only in Denver, but across the country as well.

While selling Seal Financial Services was a top priority for Greg and Janet, it was important for them not to lose focus on the bigger picture, which was keeping the clients his company had worked hard to retain. To do this, advisors must remember that individuals are often particular about whom they select to handle their finances and don’t anticipate a great deal of change. Therefore, in order to maximize the sale price, advisors must continue to run their business effectively to retain as many clients as possible after the sale is complete

In the end, selling his successful firm was a double win for Greg and Janet. It provided them with the opportunity to continue sharing their wealth of financial planning knowledge as an employee at Seal Financial Services, while having more time for leisurely travel, specifically to Italy for Greg and his wife. Although the sale was no small task, as Greg and Janet put it, “Life is GOOD. We could not be any happier.”

1 Comment

  1. Nice story showing our empathy for RIAs. You should add transition coaching to your offerings. Maybe it would also lead to potential acquisitions for Capstone as well if you can overcome conflict of interest concerns.

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