Meet Gretchen Betts, the multi-award-winning owner of Magenta Financial Planning

This month Vicki had the pleasure of talking to the multi-award-winning co-founder and sole owner of Magenta Financial Planning, Gretchen Betts.

Read on to learn about Gretchen’s experience of going through a management buyout (MBO) and find out how her business has evolved since.

Please introduce yourself and your business and tell us how long you’ve been running the firm.

I’m Gretchen Betts, co-founder and now sole owner of Magenta Financial Planning – and a proud, childless cat lady!

I’ve been running the firm for nine years and have been the sole owner for the last four years. My career in the profession spans 24 years, with 17 of those as an adviser.

What motivated you to pursue a management buyout? Was an Employee Ownership Trust structure considered, and if so, why was it discounted?

After the first Covid-19 lockdown, my business partner, Julie, lost her enthusiasm for being actively involved in the business.

Initially, we had planned for her to retire a few years later, but it became clear that she wanted out sooner – particularly as she wasn’t keen on transitioning to virtual client meetings.

We explored various options, including an Employee Ownership Trust (EOT). However, since I already owned 20% of the business, valuation stakes, private ambitions, and had a deep understanding of its operations, we felt that an MBO – if financially viable – was the best choice.

The alternative would have been selling the business, which Julie would have wanted to do within three years.

Can you walk us through the process of the management buyout? How it came about, how you structured the deal, and what the key milestones were?

Much of the deal was negotiated privately without external advisers. Having previously purchased two smaller tranches of shares from Julie, we were already comfortable discussing valuation in a fair and transparent way.

We quickly agreed on a price and validated it through discussions with industry peers and business consultants.

Initially, we approached the Development Bank of Wales for funding, but they lacked an understanding of financial services businesses and wished to take a large stake in the company.

Instead, we secured funding from Vertus – a lender specialising in financial planning firms – which was a game-changer.

I was initially apprehensive about the financial implications and personal liability of taking on debt. However, due to the firm’s strong financial health, my personal liability was ultimately limited to a personal guarantee.

The deal was structured with an upfront payment to Julie (funded via borrowing) and a deferred payment plan over 3.5 years.

Julie officially left the business six months before the MBO was completed. During that transition period, she stepped back from advising but we retained her to assist with business management.

Because we had worked together for eight years and I had already built relationships with many of her clients, the transition was smoother than it might have otherwise been.

While negotiating the Heads of Terms, we had some challenging discussions, but we remained honest, open, and fair. We both recognised that greed could have derailed the deal. Fortunately, we navigated the process without major disputes.

After finalising the legal restructuring – approved by the Financial Conduct Authority (FCA) – the business now operates with a holding company managing the shares and debt, while the regulated financial planning business sits beneath it.

A key milestone was last February when we repaid Julie’s final deferred payment a full year ahead of schedule, which felt amazing!

While we are still in touch, the nature of our relationship has evolved. Instead of discussing business all the time, we just enjoy our joint love of Japanese food.

Taking full ownership has sometimes felt like an immense responsibility and can be very stressful, but it has also been deeply rewarding.

What were the biggest challenges you faced during the buyout process, and how did you overcome them?

The most frustrating aspect was the legal paperwork and the back-and-forth with solicitors. While their job is to protect both parties, legal processes often feel unnecessarily slow and complex.

We chose reputable local firms with corporate law expertise, which helped somewhat compared to dealing with a large firm. However, the legalities were still the most tedious part of the process.

Looking back, is there anything you would do differently – whether in the negotiation, funding, or transition period?

The transition period could have been structured differently.

While Julie had stepped away from advising, we had agreed that she would continue contributing to marketing and training on a consultancy basis for a few years.

In hindsight, this arrangement lasted longer than necessary, and I’m not sure the value justified the ongoing cost. Negotiating to reduce this expenditure later on was an additional challenge.

Also, if I had a magic wand, I would have prevented Brexit, the Covid-19 pandemic, and Russia’s invasion of Ukraine – to avoid the cost-of-living crisis and the resulting interest rate hikes that doubled my loan costs (ouch!).

Culturally and operationally, how has the business evolved since the management buyout? Have there been any unexpected shifts in leadership dynamics, client relationships, or company vision?

The company culture has definitely evolved. I believe we are now more team-oriented and operate in a calmer, more collaborative environment.

My leadership style has been more visionary and democratic, with a clear emphasis on our values and goals. I’ve also worked hard to position Magenta as a thought leader, particularly in championing women in finance.

For clients, our goal has always been a seamless experience. We continue to deliver a professional, friendly, and client-focused service.

A particularly gratifying moment came at a recent event when a long-term client, who had been with Julie for over 20 years, commented, “Julie who?”, when I mentioned in my speech that it had been four years since she retired. That felt like a testament to how smoothly the transition had gone.

What advice would you give to other financial planning firm leaders considering a management buyout? Are there key lessons that could make their journey smoother?

If you aspire to an MBO, position yourself in a way that makes you indispensable to the business.

• Ensure that the exiting owner cannot – and does not want to – run the firm without you.
• Build relationships with all clients, even if it’s just by attending events with them, producing content for your firm (for example, in blogs or newsletters), or handling enquiries in the absence of senior partners. Establishing that trust early makes for a much smoother transition.
• Understand your business’s financials inside and out. Be proactive in exploring different pricing structures, funding sources, and deal terms.
• Finally, recognise that an MBO requires risk – financial, reputational, and emotional. Be prepared for the challenges that come with it but also know that with the right planning and mindset, it can be incredibly rewarding.

What’s next for the business? What are your ambitions for its future growth and development?

2025 has started as our busiest year yet, which is fantastic.

However, I’m reaching client capacity, so our primary focus is now on staff development, securing Competent Adviser Status (CAS) sign-offs, and ensuring we have the capacity to continue serving clients at the highest level.

Having navigated the MBO during some of the most challenging financial periods in recent history, I tend to take a cautious, short-to-medium-term approach to business planning.

That said, my passion is closing the advice gap for women by providing financial guidance in a language they understand. This mission drives everything we do at Magenta, and I’m committed to making an impact in this space.

Get in touch

If you’d like to learn more about working with Melo, we’d love to hear from you! Hit us up by email at hello@melo.co.uk or call us on 0113 4656 111.