Sell Your Financial Services Business

Selling your financial services business is a significant undertaking that requires careful planning and execution. From determining a fair market value, planning your exit, enlisting the right experts, and reaching the ideal buyers, this guide covers the essential steps needed to ensure a successful transaction.

1. Determine the Value of Your Financial Services Business

Businesses in the financial services sector sell products and services, supporting individuals and organizations in managing their finances. Whether you own an accounting practice, a banking institution, a loan business, a check cashing service, or an insurance agency, understanding the value of your business is the first step in the selling process.

There are many methods for valuing a business, with market, asset, and income-based valuations being the most common. Choosing the right valuation method will depend on various factors, such as the business’ structure, age, financial history, and unique characteristics. The majority of business owners and buyers start with a market-based approach to determine the value of the business.

Market-Based Valuations and Pricing Multiples

Valuation methods in the financial services sector often rely on pricing multiples, ensuring objectivity and competitive pricing. These multiples compare your business to similar companies that have recently sold, considering industry-specific factors like earnings (cash flow) and revenue (gross sales). By relying on industry-specific multiples, business owners, brokers, and buyers in the financial services sector can calculate what a business is worth relative to recent sale prices. This method of valuation is common among profitable businesses. For owner earnings under $1 million, seller's discretionary earnings (SDE) is the appropriate cash flow metric and discretionary expenses are added back to the company’s bottom-line profits.

Financial Services Business Valuation Multiples

Average earnings and revenue multiples for financial services businesses sold on BizBuySell

Financial Services Businesses Sold (2017-2024)	Average Earnings Multiple	Average Revenue Multiple
Accounting Businesses and Tax Practices	2.08	1.04
Banking and Loan Businesses	1.05	0.24
Insurance Agencies	2.68	1.44
Medical Billing Businesses	2.97	1.53
Other Financial Services Businesses	2.42	1.14

Source: BizBuySell Insight Data
Industry Benchmark Reports:

Select... All Financial Services Accounting & Tax Business Medical Billing Businesses Insurance Agencies Loans & Lending Businesses

Financial Services Business Earnings Multiples

While business valuations fall within a certain range, the value of each individual business is unique and depends on several factors, including the local market, specific financials, and business operations. For financial services businesses, the average earnings, or cash flow, multiple is 2.22.

So, using the average multiple for financial service businesses, a company with annual earnings of $400,000 could be worth over $800,000 on the open market.

Valuations Based on Sales or Revenue

While many financial services businesses, buyers, and brokers will use cash flow or earnings multiples when evaluating a business’ valuation, there are occasions where it’s helpful to calculate revenue-based valuations. Revenue-based valuations provide additional insight into how a company compares to industry standards. A revenue multiple valuation values a company based on a multiple of its total revenue, the total amount earned before deducting any expenses or costs.

The average financial business revenue multiple is 0.94, so a financial services business might sell for over 94% of annual revenue.

Documents Needed to Value Your Financial Services Business

To determine your business's value accurately, you'll need to provide comprehensive and organized documentation. Be prepared with records spanning the past three years, detailing your business's historical performance. Key documents include:

• Profit and loss statements
• Current balance sheets
• Cash flow statements
• Statement of SDE
• Tax returns for the business
• Insurance policies
• Supplier and distributor contracts
• Employment agreements
• Note for seller financing, if applicable

2. Recruit a Team of Advisors To Help Sell Your Financial Services Business

To get the best possible outcome for your business sale, consider hiring some experts. The right team of professionals to help with valuation, marketing, negotiation, and the sale of your business will free up your time to keep running the company while it’s up for sale. Accountants, attorneys, and business brokers can help ensure the sale transaction goes smoothly.

An Accountant

As a business owner in the financial services industry, you recognize the value in having an independent certified public accountant on your team to verify financial records. An independent CPA with experience in the business-for-sale marketplace will prepare financial statements, handle complex financial transactions, and review your financial records. Beyond these functions, a CPA plays a role in helping determine fair value for your business and developing strategies to maximize its worth, as well as providing effective tax planning strategies. As your financial advisor, their skill set will come in especially handy during the due diligence phase when buyers will scrutinize your financial documents. Consider having a CPA on your team well before you place your business for sale.

An Attorney

An attorney with experience in business acquisitions is essential for navigating the legal aspects of selling your financial services business. Lawyers will offer advice on everything from negotiation strategies, implications of various financing options, how to structure the sale, and tax consequences. They’re also instrumental in conducting and responding to due diligence requests as well as drafting and reviewing contracts and the purchase and sale agreement. Attorneys typically work on a flat fee basis and will offer advice on legal issues throughout the process.

A Business Broker

Business brokers act as intermediaries and advisors throughout the process of selling your business. It’s important to select a broker with experience and specialized knowledge of the finance space, as they can offer specific advice for maximizing value. Brokers work on commission, typically 10-15% of the final sale price, and offer a wide range of services. From valuation and determining an asking price to marketing the business for sale and closing the deal—business brokers are particularly beneficial for businesses that are challenging to price.

3. Plan Your Exit

Many factors influence the timeline for selling a business—expect the process to last between six months to a year. For context, financial service businesses sold on BizBuySell in 2024 spent a median of 169 days on the market. Key factors to consider when assessing how long selling your business will take are purchase price, industry and type of business, buyer type, location, structure, business broker, among others.

Impacts on Business Multiples

In order to make your financial services business more appealing to a potential buyer, take some time to evaluate it and pinpoint any areas that need to be improved. Now’s the time to identify individuals who can take on more responsibilities and provide training to team members, if necessary. Careful evaluation and implementation of modifications can increase the value of your business.

4. Find Buyers

As you market your financial service business for sale, the goal is to get it in front of as many qualified buyers as possible to generate multiple offers. There are a variety of options available when it comes to thinking about potential buyers for your business. Consider whether you want to sell your business to employees, family members, competitors, or place it on the open market.

For most businesses, maintaining confidentiality is important during the business sale process. Keeping the sale confidential helps maintain value, and if you’re working with a business broker, they are adept at fielding inquiries from would-be buyers without revealing the company identity. They will market your business for sale and create a “blind listing” on business-for-sale marketplaces. They will also have an NDA prepared for anyone interested in reviewing the details of your business. 

When creating a listing on business-for-sale marketplaces, a thoughtful listing makes all the difference. It’s often the first impression for potential buyers, so take time to create a comprehensive and compelling listing. The top components of a successful listing are:

1. Including key financials, such as cash flow, revenue, EBITDA, inventory, and asking price.
2. Providing geographic information while maintaining confidentiality.
3. Crafting a headline to pique interest.
4. Selecting multiple categories for maximum exposure. Business-for-sale marketplaces, like BizBuySell and BizQuest, offer a secondary category option to help maximize exposure.
5. Including descriptive photos of the business. Use stock photography to keep the listing confidential.

5. Negotiate Terms & Close

The final steps when selling your financial services business revolve around negotiating the terms and ultimately closing the deal. The duration of the due diligence phase varies, spanning from a few weeks to a few months, depending on the complexity of the transaction. Due diligence can get complicated, so having an accountant, attorney, broker, or all three deeply involved will expedite the process.

Be prepared to provide the buyer a variety of items, including financial records, details about business structure, operational procedures, contracts and any existing liabilities. Additionally, be prepared to share customer data, employee details, insights into any legal matters, information about physical assets, and the status of intellectual property.

It’s not uncommon for issues to arise during due diligence, so be prepared to negotiate. There are many ways to bridge the gap and address issues, including making modest price adjustments, utilizing creative deal structuring, and restructuring financing terms to alleviate potential roadblocks.

Once final terms of the deal have been negotiated and agreed upon, it’s time to close the deal. At the closing, the business owner(s), buyers, attorneys, and brokers will gather to review and sign all necessary documentation, including the purchase and sale agreement, to complete the transaction. After the sale is complete, it’s time to transfer the business operations to the new owner. Your attorney and broker will assist in the final post-closing process.

By understanding the value of your business and the workings of the business-for-sale market, selling a financial services business can be a much simpler process. Whether you list and market the business on your own, or hire a business broker, you'll be on your way to a smooth transaction and close the sale quickly.