In a Nutshell: Advisors are so focused on working with clients and dealing with the business that they often shortchange the goldmine of information lurking in their firm’s profit and loss (P&L) statement. By cleaning up your firm’s P&L statement and taking time each month to review it and look for trends and opportunities, you can increase your profitability and optimize your valuation when it comes time to sell.

Guest: Allen Darby, the CEO of Alaris Acquisitions. Earlier in his career, Alan was a financial advisor and a buyer advisor for United Capital, where he sourced and closed 32 acquisitions.


My Key Takeaways:

  1. Classify your revenue. A buyer that’s valuing your company isn’t just looking for a strong top-line number; they want to know the source and longevity of that revenue, as well as how it is billed.
  2. Calculate your EBITDA.  By creating a “clean” P&L statement, you can calculate your EBITDA, add a multiple to it and get a quick range for what your company is worth.
  3. Give yourself time to optimize. You need to start optimizing your practice several years before the date you want to sell it in order to maximize your value.

Also Learn:

  1. The key metrics that Allen’s team analyzes when they’re evaluating advisory firms.
  2. Allen’s advice to firms that want to ramp up their profitability before a potential sale.
  3. How to navigate staffing and compensation challenges that could be in conflict with your growth goals.

Complementary podcast: Jon Jones of Brighton Jones used an RIA CEO mentality as he prepared his company to operate without him for a year. Listen/read here.

Resources Featured In This Episode

Allen Darby