A name is not
a succession plan.

Ask a principal about succession and you will hear a name. A plan has a method, a funding mechanism, a timetable and an answer for a Tuesday.

The plan most firms have is not a plan

Ask a principal about succession and you will usually hear a name. A junior advisor who will buy in one day, a colleague who has agreed in principle, a child who might be interested.

A name is not a plan. A plan has a valuation method, a funding mechanism, a timetable, and a written answer to what happens if the principal dies on a Tuesday rather than retiring on schedule.

Three things being decided at once

Who runs it. Continuity of client relationships and of decision-making. This is the part clients experience and the part that determines whether the book survives the handover.

Who owns it. Equity, and how it transfers. Internal succession usually means the buyer funds the purchase out of the firm's own future cash flow, which constrains how fast it can happen.

What it is worth. Not a number you assert — a method both sides agreed to in advance, because agreeing a method while everyone is relaxed is far easier than agreeing a number when one party is leaving.

Internal versus external, honestly

Internal succession preserves culture and client continuity, and usually prices lower, because the buyer is funding it from the firm's cash flow over years. External sale usually prices higher and introduces integration risk the seller no longer controls.

The choice is frequently made by default rather than deliberately: a principal who never developed a successor has chosen external sale, whether or not they think they have.

What makes a firm buyable

Buyers price risk. Everything that reduces perceived risk raises the multiple, and all of it is decided years before anyone is negotiating.

• Client concentration. A book where the top ten relationships are a large share of revenue is worth less, because the buyer is purchasing ten relationships rather than a firm.
• Key-person dependency. If every client relationship runs through the principal, the buyer is acquiring an asset that walks out with the seller.
• Documented process. A firm where the investment process, the review cadence and the operations exist in writing is transferable. One where they exist in someone's head is not.
• Clean data and history. Diligence is where messy records surface, and they surface as a discount rather than as a question.
• Client age distribution. A book with an average client age of seventy-four is a decumulating asset and gets priced as one.

What a buyer is actually pricing →

The document that should exist and usually does not

A continuity agreement covering sudden death or incapacity, naming who steps in, what they are authorised to do, and how clients are told. It is not the same as a succession plan and it is more urgent, because the event it addresses does not wait for you to be ready.

Many state regulators expect a business continuity plan to exist regardless. Most firms have one that addresses a power outage in more detail than the death of the person who makes every decision.

Where to start

Write the continuity agreement first — it is the shortest document and it covers the risk that is live today. Then agree a valuation method. Then decide whether you are developing an internal buyer, because that decision has a five-to-ten-year lead time and the firms that leave it late discover they chose external sale by inaction.