Ep 246: Finding The Right (Valuation) Formula To Give Everyone Buy-In For An Employee-Owned Advisory Firm with Jessica Hovis Smith
Financial Advisor Success
Michael Kitces
4.8 • 696 Ratings
🗓️ 14 September 2021
⏱️ 90 minutes
🧾️ Download transcript
Summary
Jessica Hovis Smith is the President of Longview Financial Advisors, an RIA based out of Alabama that oversees $194 million for 199 clients. Jessica oversaw a succession plan that brought two lifestyle practices into one employee-owned, multi-generational firm, navigating multiple transitions along the way to eventually arrive at a valuation that was fair for everyone.
Listen in as Jessica shares her own personal journey to President of Longview, what it was like overseeing a succession plan that merged two lifestyle practices, and how they structured their purchase to ensure that new owners stood the best chance of staying with the firm throughout their careers. We also discuss the multiple transitions that happened along the way to arriving at a valuation that the founders and internal buyers were happy with, as well as why the actual process of arriving at that valuation was the biggest contributing factor to getting everyone’s buy-in.
For show notes and more visit: https://www.kitces.com/246
Transcript
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| 0:00.0 | Welcome to the Financial Advisor Success Podcast, where you go behind the scenes with |
| 0:07.1 | financial planner, speaker, and consultant Michael Kitsis to hear stories of how leading |
| 0:12.5 | financial advisors navigated the inevitable challenges that arise on the path to success |
| 0:17.5 | and get insight from leading industry consultants about how to break through to the |
| 0:22.0 | next level in your advisory business. And now here's your host, Michael Kitsis. Welcome, everyone. |
| 0:28.6 | Welcome to the 246th episode of the Financial Advisor Success podcast. My guest on today's podcast is |
| 0:35.0 | Jessica Hobes Smith. Jessica is the president of Longview Financial Advisors, an RIA with offices in Gadsden and Huntsville, Alabama, that managed $194 million for $199 clients. |
| 0:46.8 | What's unique about Jessica, though, is that she oversaw a succession plan that sought to transition ownership of two merged lifestyle practices into a single |
| 0:55.1 | employee-owned multi-generational firm, navigating multiple transitions along the way to eventually |
| 1:00.1 | arrive at evaluation that both internal buyers and the founders who were selling felt was fair. |
| 1:05.9 | In this episode, we talk in depth about how Jessica's firm structured their purchase to ensure that the new |
| 1:11.5 | owners both understood the company culture and had a better chance of remaining with the firm |
| 1:15.2 | throughout their careers. How Jessica and her firm were able to find local banks to finance |
| 1:19.4 | smaller buy-ins from employees for shorter durations rather than industry banks that were only |
| 1:23.9 | interested in larger one-time transactions. And why the actual process used to arrive at Jessica's firm valuation |
| 1:30.0 | turned out to be a bigger contributing factor to get everyone's buy-in |
| 1:33.3 | than the final valuation number itself. |
| 1:36.2 | We also talk about why Jessica's firm makes a clear distinction |
| 1:39.7 | between the firm's financial planning and wealth management services, |
| 1:42.5 | with each department having their own separate teams, even though most clients receive both services. |
| 1:47.7 | How Jessica incorporates philanthropic planning into her practice and why she decides she wanted |
| 1:51.9 | to work with clients with a giver's heart in the first place. |
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