Ep 395: The Rise Of Bank Financing To Fund Independent Advisor Acquisitions And Succession Plans With Dustin Mangone

Financial Advisor Success

Michael Kitces

News, Business, Entrepreneurship, Business News

4.8 • 696 Ratings

🗓️ 23 July 2024

⏱️ 99 minutes

🔗️ Recording | iTunes | RSS

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Summary

Dustin Mangone is the Director of Investment Advisor Services of PPL Loan, a firm based out of Texas that facilitates conventional bank loans to financial advisors. Dustin's firm uniquely enables financial advisors to access bank lending—a traditionally difficult source of debt capital in the advisory industry—for financing various transactions, including RIA and independent broker-dealer acquisitions, internal succession plans, and other growth initiatives. This approach provides vital support for advisors looking to expand or transition their businesses.

Listen in as Dustin shares how his firm partners with banks to provide loans to financial advisors purchasing advisory firms, enabling sellers to receive the purchase price upfront and increasing loan amounts as advisor repayment success grows. He discusses the key financial metrics used to determine loan amounts for mergers and acquisitions, such as the buyer’s capitalization and the selling firm’s recurring revenue, and explains how these loans support both full purchases and partial buy-ins during internal firm successions. Dustin also touches on current trends in advisory firm valuations, the differences between conventional bank loans and Small Business Administration loans, and the continued robust financing opportunities for advisory firm transactions, underscoring the inherent stability of these businesses due to their long-term client relationships.

For show notes and more visit: https://www.kitces.com/395

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
0:12.4	financial advisors navigated the inevitable challenges that arise on the path to success
0:17.4	and get insight from leading industry consultants about how to break through to the next
0:22.2	level in your advisory business. And now here's your host, Michael Kitsis. Welcome, everyone.
0:29.0	Welcome to the 395th episode of the Financial Advisor's Success Podcast. My guest on today's
0:34.3	podcast is Dustin Mangon. Dustin is the director of investment Advisor Services of PPC Loan, a firm based in the
0:40.6	Woodlands, Texas, that facilitates conventional bank loans for financial advisors.
0:45.9	What's unique about Dustin, though, is how his firm allows financial advisors to tap into
0:49.9	traditional bank lending, a historically challenging source of debt capital for the advisory
0:54.9	industry to finance both RIA and independent broker-dealer transactions from internal
1:00.2	succession plans to acquisitions to other growth initiatives. In this episode, we talk in depth
1:05.8	about how Dustin's firm works with partner banks to offer loans to financial advisors buying into or all of an advisory firm and enabling selling firm owners to receive most or nearly all the purchase price up front without the need or awkwardness of relying on a seller finance note that just paid back to the original owner with the profits they were already getting in the first place.
1:27.8	How the repayment success for bank lending to financial advisors has led to increasingly
1:33.0	larger loan amounts available, sometimes up to 100% of the acquired firm's purchase price,
1:37.6	depending in part on the financial strength of the acquiring firm.
1:40.8	And the key metrics that Dustin's firm ultimately uses to determine the amount it's willing to lend
1:45.4	for M&A clients, including the buyer's capitalization, the selling firms recurring revenue,
1:50.1	and the ratio of the firm's profits to its anticipated debt payments after the deal closes.
1:55.1	We're going to talk about how Dustin's company facilitates internal advisory firm successions,
1:59.3	including both partial buy-ins and complete purchases,
2:02.3	and how the metrics that Dustin's firm uses changes when considering loans to internal buyers
	...

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