Ep 114: How to Finance an Advisory Firm Acquisition

Episode 114: How to Finance an Advisory Firm Acquisition
Guest: Greg Prokott

Overview

Welcome to the Financial Advisors Want to Know Podcast! I’m Catherine Tindall, CPA with Dominion Enterprise Services, where we help financial advisors navigate income tax planning and compliance for their firms.

In this episode, I sit down with Greg Prokott, Managing Partner at Advisor Financing, to discuss the financial realities of buying, selling, and transitioning an advisory firm. With more than 30 years of experience in financial services, Greg brings a lender-focused perspective to advisory firm acquisitions and shares what advisors need to understand before pursuing a deal.

We explore how acquisition financing has evolved, what banks actually evaluate when lending to advisory firm buyers, and the differences between conventional financing, seller notes, and staged ownership transitions. Greg also explains why preparing years in advance, understanding your firm's true value, and structuring a deal around both financial and relationship considerations can make all the difference in a successful acquisition or succession.

Key Takeaways:

✅ Start Preparing for an Acquisition Years in Advance
Advisors should ideally begin exploring financing options two to three years before a potential purchase. Early preparation provides time to strengthen financials, address potential obstacles, and position themselves for a successful transaction.

✅ Understand What Lenders Actually Evaluate
Banks look beyond the cash flow of the practice being acquired. Personal liquidity, existing debt, team capacity, and the ability to withstand financial setbacks all play important roles in financing decisions.

✅ Know What Your Advisory Firm Is Really Worth
Revenue alone doesn't determine valuation. Profitability, client demographics, asset flows, operating expenses, and business structure can all significantly influence what a practice is worth.

✅ Choose a Financing Structure That Supports the Transition
Conventional loans, seller financing, and staged ownership purchases each offer different advantages. The right structure should balance cash flow, client retention, and the financial needs of both buyers and sellers.

✅ Treat Internal Succession as Both a Financial and Relationship Decision
Differences in valuation expectations, employee contributions, and ownership responsibilities can create challenges. Early communication and thoughtful deal structuring help align expectations and support a smoother transition.

🔗 Connect with Greg

LinkedIn: https://www.linkedin.com/in/greg-prokott/

Website: https://www.advisorfinancingllc.com/

🔗 Connect with Catherine

LinkedIn: https://www.linkedin.com/in/ctindallcpa/

Newsletter: https://dominion-enterprise-services.kit.com/9944b047d9

Email: admin@dominiones.com