Listing in
Claremore, OK

I am interested in purchasing a book of accounts for my newly formed RIA via an earn-out agreement. An example of the payout structure is 75bps per year for 3 years of the balance of the accounts. My RIA is very focused on financial planning and devliering superior client service. This is a good opportunity for an advisor to sell even a section of his/her book (commission- or fee-based) for ~0.75 x 3 = 2.25%. An example of an earn-out structure is below.

Say for example the accounts were for sale for $100,000 and trailing 12-month revenue was $50,000. Rather than paying the seller the $100,000 upfront, the buyer would pay the seller, say, 60% of the business’s revenue for the next four years. $50,000 x 60% x 4 years = $120,000. This allows the seller to sell his business for more than the asking price and participate in the growth of the revenue over the earn-out period (if revenue increases, so does the payout). Of course, the risk to the seller is that the revenue could decrease.

Thank you.