According to ECHELON Partners, which developed the tool, the offering can help advisers prepare for a variety of potential business transitions such as merging with a partner; buying or selling a business; configuring buy/sell equity incentives; or reorganizing a family-owned business.
“Historically, many advisers have relied on ‘rule of thumb’ methodologies to value their businesses. But each adviser’s practice is different and the typical two-to-three times revenue multiple may not be reliable,” said Michael Watson, director of Practice Management, TD AMERITRADE Institutional, in a news release. He noted that, in addition to giving advisers the current value of their firms, the tool aims to help advisers increase business value over the long-term.
How it works is that advisers input qualitative and quantitative variable about their businesses across 10 categories, such as financial performance and business model. They then receive three customized reports: a high-level overview, a valuation summary, and a scorecard of valuation drivers (scoring performance from excellent to weak).
The tool is available at no charge to RIAs who custody assets with TD AMERITRADE Institutional and is accessible on the Veo advisor Web site. For more information, call 1.800.934.6124.