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How to finance IFA acquisitions

by William Robins on Nov 30, 2010 at 00:01

How to finance IFA acquisitions

Sheriar Bradbury (pictured), Steve Moseley and Mark Woods explain the best way to fund buying up other client books.

Sheriar Bradbury

Managing director, Bradbury Hamilton

I don’t get the company to borrow money, that way there’s no debt.

I feel the banks are too unreliable. I would not run an overdraft they could withdraw at any time. I have seen that happen to some.

There are also problems for any upfront deal. If you start doling money out upfront then what guarantee do you have from the other end? You would not be able to enforce their end of the agreement and you lose leverage.

Don't pay upfront

My advice would be to save up cash over time, and if you don’t have cash then don’t pay upfront. We never pay more than 50% initially for an acquisition. It would be too much of a strain on cashflow.

What you can do is use an asset. Indeed, you could set it against your house. That way you are only risking the money you have provided. If you borrow against the business the bank’s claim is not restricted to the money put up. The bank will probably ask directors for a personal guarantee in which case you might as well get a cheaper loan restricted to your own property.

Just make sure you clear it with any dependents living there.

If you are not putting up the cash then the lenders are taking a bit of a risk on you, because you are not putting up your own money.

Steve Moseley


Director, Sterling McCall

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8 comments so far. Why not have your say?


Dec 01, 2010 at 15:58

This must be the most useless "news" item Citywire has ever published and, by God, that's going some.

Can anybody tell me what these people are talking about, what use it is and how they are qualified.

I get the feeling I could spend two hours with each of them and still not have a clue what they are proposing (and neither would they).

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Dec 01, 2010 at 16:05

You cannot borrow against your house on a residential mortgage for business purpose?!

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Philip Vaughan

Dec 01, 2010 at 16:39

These guys need an IFA to help them with their strategy start saving then ring me!

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martin beazer

Dec 01, 2010 at 19:23

"my advice would be to save up cash over time"

Er ok.

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Eddie Royce

Dec 01, 2010 at 19:47

So your saying ... you ask the selling IFA to wait for 2 to 4 years for the trail he would have got over the 2 to 4 years anyway.

If there are retiring network type IFA's mostof them will have quite good Practtice buy out arrangements that provide very good value to the IFA. Good Luck!

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Steve Hagues

Dec 02, 2010 at 10:27

Elongating the payment shape so the deal finances itself is absolute genius, for the acquirer anyway.

Sellers, be aware that there are plenty of acquisitive regional brokerages and national consolidators prepared to pay between half and all of the total sales price up-front.

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Head on its

Oct 06, 2011 at 18:36

Dear Steve Hagues,

Could you tell us the name of the companies doing what you say and their phone numbers.

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Steve Hagues

Oct 07, 2011 at 11:26

Dear head on its,

That would be a very long list (about 550). If you call my office on 01765 698699 then Im sure we can introduce you to the relevant one in your area. The service is free to sellers.

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