Timeline of an IFA Acquisition: Important Steps Beginners should follow

 

Many of our clients want to know how long an IFA Acquisition typically takes from the initial engagement to the final payment. Our weekly blog post will focus on this issue. 

Choose to retire

The decision to retire is a major one, even if it isn't technically a part of the IFA Acquisitions process. It is good to have some idea of the limitations of the IFA Acquisitions market before making such a call. 

Awareness of the potential benefits and pitfalls of a retiring IFA acquisition is critical. Before beginning the acquisitions process, you should be familiar with the FCA turnaround periods for change of control. See where shares are sold and defined benefit (DB) pension transfers if you have provided advice. 

First, have an IFA Acquisitions broker be chosen

After you've narrowed down your IFA exit strategy options and chosen a broker, you'll likely have an introductory phone chat with them. This will help to learn more about each other and your respective businesses. 

The next step is to choose an acquirer (1–2 weeks)

Next, your broker will use the information from step 1 to narrow down a list of potential acquirers that could be a good fit for your exit objectives.

They will present the proposals and receive your feedback and approval before proceeding with the introduction. Remember that we will never share your information with an acquirer without your consent.

After two to four weeks, you will meet potential buyers

At this time, let's arrange a meeting in which you can meet the acquirer over the phone or by video call for an initial introduction. Keeping a list of things you want answers to or clarification for the buyers can be helpful.

Heads of Terms (4 weeks to 1 month)

There may be a need for additional IFA exit strategy meetings. But sometimes negotiations can move straight to an offer, which is typically provided via an offer in principle and then presented in more detail where Heads of Terms are generated if both parties are in agreement.

Although non-binding at this stage, Heads of Terms sometimes include an exclusivity clause prohibiting competing negotiations during the specified period. 

Finalization after 3-12 months

Assume that the FCA has approved the change of control for share purchases of directly authorised enterprises. This can take up to three months from the date of application). The acquisition can proceed to completion.

To ensure a seamless transition of retiring IFA clients, the new acquirers will meet with the vendor's clients to undertake handover meetings.

Reimbursement beginning 0 to 36 months after completion

Payment is the last step. The typical deal structure is for 50% of the total consideration value to be paid upon closing, 25% after 12 months, and 25% after 24 months.

There are longer-term contracts (often greater than 3 years), shorter-term contracts (typically 1-2 years), and everything in between. The multiple may change based on the duration of the agreement and the amount of money paid up front.

Conclusion 

Knowing the typical procedure of an IFA Acquisition will help you prepare for the exit process. Even though this is a typical timetable, the time frames and methods differ from one acquisition to the next.