Thinking of selling your business? 10 green flags potential buyers want to see

March 10, 2025

After years of nurturing and developing your firm into a thriving business, you’ll no doubt want to achieve an outcome (not to mention a price) that you and the people who are important to you are happy with.

That means carefully planning your exit strategy and taking the time to make sure your company is in peak condition before you head to market.

Wouldn’t it be great if you could sneak a peek at your potential buyers’ wish lists? Armed with this knowledge you could tweak your business to give you the best chance of success.

Well, guess what? We’ve pooled the Melo team’s years of experience to give you just that – the top 10 items on buyers’ wish lists when they’re hunting for the perfect financial planning firm.

1. A stable income

It stands to reason that any potential buyer will want to feel confident that your firm has consistent and recurring revenue streams, such as fees and renewals.

If you can show that your business can continue to deliver a stable income moving forward – come rain or shine – you’ll be off to a great start.

In fact, demonstrating that your firm has a healthy mix of income streams – ongoing fees and new business – is a great way to show that your firm can offer both stability and growth.

2. Profitability

One thing almost guaranteed to spark the interest of potential buyers is a healthy bottom line.

So, if your firm has strong profit margins, be sure to showcase this to any interested parties.

That means checking that your financial statements are up-to-date and accurately reflect your company’s profitability. That brings us to…

3. Fully documented annual reviews

The only way to evidence your firm’s future financial health is to have fully documented annual reviews to hand when a buyer comes knocking.

And we don’t just mean for the current financial year. Any serious buyer will expect to see at least six or seven years of records – or for your firm’s full lifecycle if it hasn’t been up and running that long.

This shows a buyer that the recurring revenue being received is coming from clients who are well looked after and really value the service you provide.

4. Effective data management

In financial services right now, it’s less about “location, location, location” and all about “data, data, data”.

The Financial Conduct Authority (FCA) has made it clear that it expects firms to collect comprehensive data that shows how well they’re meeting the Consumer Duty.

Prospective buyers will almost certainly want to see that you have effective data management strategies in place to demonstrate your firm’s compliance with the FCA’s requirements.

So, if you’re preparing to sell, be sure to have strong data that you can access as and when you need to. This might mean revamping your back-office system to ensure that you have efficient processes for income reconciliation, tracking reviews and so on.

5. Growth potential

We touched on this when discussing your firm’s income streams, but it’s definitely important enough to make our list as a green flag in its own right. Buyers want to acquire firms they can grow, rather than a depreciating asset.

Buyers will be eager to see how they can grow the business after you’ve moved on. If you can reassure them that your firm has such potential, this could help you secure a sale and a premium price.

6. A unique value proposition

In a competitive market, every business needs to find a way to stand out from the crowd. Financial planning firms are no different.

Differentiating yourself from the other companies might help your firm rise to the top of potential buyers’ wish lists.

If you have a niche market focus or a unique value proposition, don’t hide that light under a bushel – shout it from the rooftops!

7. Strong leaders and a committed team

The skill and experience of your staff are crucial for the success of your business. So, it’s no surprise that buyers will be interested to learn about your team’s performance and achievements.

Just as a stable and consistent income could instil faith in a prospective buyer, a reliable workforce under strong management could be a major green flag.

8. An attractive client base

Your clients may be of just as much interest to a buyer as the people on your team.

For example, if your client base includes a healthy dose of young professionals, retirees and high net worth individuals, it might be particularly attractive to interested parties.

Likewise, if your clients are engaged, proactive and open to new suggestions for potential asset growth, this is likely to whet any buyer’s appetite.

9. Watertight contracts

Putting clear contracts in place for your employees and advisers might make your business much more desirable to potential buyers.

For example, including appropriate restrictive covenants and non-compete clauses could protect your business’s value by reassuring buyers that your top talent won’t disappear soon after the sale – possibly taking your best clients with them.

These clauses could also ensure that any advisers who do decide to leave for pastures new, cannot damage the business, poach staff, or make use of your trade secrets.

Seeking expert advice to draw up a watertight contract that all parties are comfortable with could reassure your buyer that they have a transparent, legal binding agreement that protects their commercial interests.

10. Cultural fit

Last, but certainly not least, your business needs to be the right cultural fit for you and the buyer! Culture before cash, as the true success of any acquisition is how well cultures are integrated.

Be clear on your culture, what makes your key people stay around? Why do your clients stay with you? A clarity about what you are and what you want is a big green flag – even if it means turning off certain buyers. A quick “no”, is second best to a “yes” for all parties.

Remember, there’s more to a successful sale than the price tag. Both you and your buyer will be keen to make sure they’re a good fit for your business and its people.