Blue Chip Issue 79

SUCCESSION
• Don’t be afraid to spend extra time going through the “fluffy
stuff” upfront. I believe articulating and agreeing on the culture,
value proposition and vision of the business is super-important
in the pre-agreement phase.
• Get an independent and professional valuer to assist you with
structuring the financial parts of the succession (valuation,
payment arrangements, agreements, etc).
• All good things take time. Both parties should not rush into
finalising the agreement for the sake of moving forward quickly.
• The longer the handover period, the better. This provides
the incoming advisor with time to learn the ropes and, more
importantly, the opportunity to build rapport with key clients
and service providers.
• Accept that things will not go 100% according to the plan.
Both parties need to be flexible and willing to adapt when
encountering the inevitable curveballs that come your way.
• Continue to nurture and respect the relationship between the
two parties. Touch base regularly to ensure things are moving in
the right direction. To this day, Bobat and I still have an amicable
and friendly relationship.
Ebrahim Moola shares his best practice
advice for matching clients with advisors
long-term success: our clients are happier (I think), AUM has grown
handsomely, we’ve relocated our offices to a leafier part of town,
grown our staff complement to 13 people and improved systems
and processes. Bobat got what he wanted too: the knowledge that
the family’s legacy and its long-standing clients were in safe hands,
Don’t be afraid to spend
extra time going through
the “fluffy stuff” upfront.
a fair pay-out for his shareholding in the business, substantially
reduced operational responsibilities and loads more free time to
spend with his grandkids and for fishing.
I believe the tips below will go a long way in helping others
find the right match and making a succession relationship work.
Tips for both parties
• It has to be a win-win situation for both parties. There needs to
be a happy meeting of minds and a well-defined understanding
of the end outcomes both parties are looking to achieve by
doing a deal.
Tips for the incoming advisor
• At the beginning, recognise that you are only seeing the tip of
the iceberg of work and relationship building that went into
bringing the business to this point.
• Spend the probationary period trying to comprehend why
things operate the way they do before making any changes.
Come into the business with a notepad, not a wrecking ball.
Tips for the outgoing advisor
• In advance, make a candid disclosure of the impending
succession (and rationale) to the key staff and big clients of the
business. Before anything else happens, you need their buy-in
to ensure the succession plan can commence.
• Allow the incoming advisor (who is usually younger and not
in a strong financial position) to pay for his/her shareholding
in the business in instalments, ideally
based on the achievement of certain
milestones within the business.
• Accept that you are no longer the final
decision-maker of the business and
gradually allow the incoming advisor
to take control of decision-making
and operations.
In hindsight, I must admit to a
healthy dose of good fortune in my
journey. I found myself in the right
place, at the right time, with the right
skills when I met Bobat. However,
I can take some of the credit for putting
myself in that position to become a
successful successor.
Ebrahim Moola CA(SA),
CFA, is a Financial
Advisor and Investment
Professional at Bobats
and Sterling Invest
www.bluechipdigital.co.za
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