Last week I made the case that buying a practice beats every other way to grow, and it isn’t close. The most common reaction to that, the one I can almost hear through the screen, is some version of: sure, for people who have a war chest. I don’t have a spare million sitting around, so this isn’t for me. That belief is the single biggest reason good Advisors never buy anything. And it’s mostly wrong.
Here’s the reframe that changes everything. You do not buy a practice the way you buy a house, by handing over one enormous check. You buy it mostly with its own money, over time, structured so the book you’re acquiring largely pays for itself. Once you see how these deals actually get done, the money stops being the obstacle. It was never really the obstacle. The myth was.
Nobody is writing one giant check
Start by killing the all-cash picture in your head, because that’s the version that scares everyone off. True all-cash deals, where a buyer pays the whole price up front, are rare. FP Transitions, which has structured more Advisor deals than almost anyone, notes that sellers usually have to give a discount to accept one, because an all-cash exit strips out the things a buyer actually wants from them, like a smooth client handoff and a non-compete. So the all-cash buyer is the exception, not the standard, and often the one getting a worse deal. If that’s the picture holding you back, let it go.
How these deals actually get paid for
The dominant structure is almost boringly reasonable. According to FP Transitions, the most common arrangement is a cash down payment of about a third of the price, with the seller financing the rest, carried as a note you pay off over an average of about five years at around five percent interest. Read that again, because it’s the whole game. The seller lends you most of the purchase price, and you pay them back out of the revenue the practice throws off every year.
Think about what that means in practice. You’re not funding this out of your savings. You put down a manageable slice, and then the clients you just acquired generate the fees that cover the payments on the rest. The book is, in a very real sense, buying itself. And if the down payment is still a stretch, there’s a bank route too, where lenders will often fund a larger share at close, with the balance carried by the seller, over seven to ten year terms. Either way, the number you actually need on day one is a fraction of the sticker price, and the fraction gets paid down by money the practice makes, not money you had to have lying around.
Growth by Acquisition Beats Every Other Strategy You’re Trying. It Isn’t Even Close.
Ask a room of Advisors how they plan to grow, and you’ll hear the same handful of answers. More referrals. More marketing. A better website. Maybe hire another Advisor and hope they ramp. All of it is real, all of it works a little, and all of it is slow. Here’s the thing almost nobody says out loud: there’s one growth strategy that beats the entire list combined, and it’s the one the biggest firms in the business quietly built themselves on. Buying other practices. Once you actually look at the math, it isn’t close.
The structure is built to protect you
Here’s the part that should genuinely surprise you, because it’s the opposite of the risk everyone assumes. In the standard deal, the seller doesn’t just get paid and walk. Their final price is tied to whether the clients actually stay. FP Transitions describes it plainly: if the seller delivers the clients, they get the full agreed price, and if a meaningful chunk of those clients don’t transfer, the price adjusts down to reflect what actually came over. There’s a buffer for normal market noise, a two or three percent wobble doesn’t move anything, but a serious loss of client assets absolutely adjusts the number. And the way that protection works is the real reason this is so much safer than it sounds.
This is exactly the kind of thing The Chairman’s Council exists to put in your hands before your competitors figure it out. Paid members get the full playbook, and every one after it.
One acquisition financed right is worth many years of membership, many times over. Upgrade and read how.
