KEY FEATURES OF PURCHASES

• Valuation Basis

The valuation basis is calculated on a practice by practice basis. The key factors that determine the valuation of a business are funds under management, renewal income and the client base. As an example , using the renewal valuation basis for an IFA practice, some of the recent purchases we have completed have been for multiples of between 2.5 and 8 renewal.

• Structure of Purchase 

Each transaction that we have completed to date has in the true sense of the word been unique. However, there are a number of common features within each purchase and a typical purchase will be for a multiple of 2.5-4 x renewal paid over a 2-3 year period. Our normal practice is to purchase the goodwill of the business and not to take responsibility for historic advice.

• Due Diligence Process

As part of the purchase, we undertake due diligence on your business. This will invariably take a day to complete and will comprise a review of files, commission records, new business register and recent compliance reports.

• Legal Documentation 

We have a suite of legal documentation that has been used for the IFA purchases to date. We do recommend that you take legal advice regarding the documentation but to undertake this toward the completion of the process to control costs. Copies of the documentation are available upon request.

• Existing Files and Client Database 

As part of the purchase, we need to compile a database of your existing clients. This is work that we can undertake on your behalf using our associated company, IFA Data Ltd, or can obtain from your existing database. We do not want existing files and when starting to advise the clients prefer to start from the basic details contained on the database and then to expand our understanding of the client.

• Protection for the Vendor 

As a standard feature of our purchase agreement we provide the vendor with a charge on their agencies to provide them with extra security until the full purchase price has been paid for the business.

• Handover Process 

A key feature of our purchase arrangement is that we require a structured and professional handover of clients and that we work with the vendor to achieve this. From experience this invariably takes between 1 and 2 months at the maximum to complete.

• Registered Individual Status 

A number of the transactions that we have completed have been undertaken on the basis that the vendor joins Bright as a Registered Individual.

• FSA Deregistration 

Bright has experience of working with sole traders, network members, partnerships and limited companies in assisting them with de registering. 

Contact Ian Craddock on 01925 839180 or email i.craddock@brightfs.co.uk