• Richard DeSalvo

All Roads Lead to You

The More You Work, the Less It May Be Worth


At a certain point in the life cycle of your wealth practice, you may look to sell the business and thus, need to determine an accurate valuation. There are many quantitative and qualitative factors that go into this calculation from gross revenues, margins, and EBIDTA to free cash flow and the age of your average client. They all matter if you want to value your business properly.


You may not realize that one qualifying factor is the volume of work you perform in the office. It’s normal to think that the harder and longer you work daily increases the value of your practice. In reality, this is only true up to a point. There is a diminishing return in the eyes of a potential buyer when they see that you spend an excessive amount of time maintaining your business.


The more you do, the less you delegate, and the more all roads lead to you. This makes it more difficult for your buyer as they need to find employees to replace every role you currently fill. The best possible situation for a prospective buyer is a business where duties are delegated properly to a qualified staff. This staff should know the inner workings of your business, understand how to stabilize your book, be well versed in investments/financial planning, and have the necessary credentials and securities licenses.


Make the business less about you and more about your team. If the operation of the business is all about you, you may be limited in your options to sell it or pass it along to the next generation. If you decide to control everything and not create strong, value-driven leadership, you may never be able to leave!


Effective delegation is essential.


Delegation is more than just offloading simple tasks to your employees. It is about matching the demands of the task to the person on your team with the skills, experience, and workload necessary to champion said task.


Managers who are not effective delegators may fail to ensure a staff member has a true understanding of what a task entails and why it’s important. Furthermore, a poor delegator might not realize if this person has skills, resources, and desire to accomplish it.


Don't expect things to go perfectly the first few times. Employees may be afraid to make a mistake and force you to micro-manage them. Give them the confidence to make mistakes and, as I like to call it, "fail-forward”. This will allow your team to learn by thinking about the problem and owning the outcome without harsh consequences.


I truly believe that if you take these lessons to heart, you can make your firm more valuable by doing less.


Rich DeSalvo

CEO and Founder

f3Logic, LLC

Where Fiduciary Freedom is First

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Advisory services are offered through f3Logic, LLC, a registered investment advisor.

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f3Logic, LLC. | 2020

11980 Portland Avenue South, Burnsville, MN 55337

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