Podcast Summary – Managing Your Practice:

Episode Title: Buy, Sell, Plan: The Business of Advisor Succession
Date: July 18, 2025
Host: Katherine Williams (A), Head of Practice Management, Dimensional Fund Advisors
Guests:

Erin Hasler (B), Managing Partner & Co-Founder, SkyView Partners
Matt Crow (C), CEO, Mercer Capital

Episode Overview

This episode dives deep into the increasingly crucial and complex world of succession planning for financial advisory firms, spotlighting the rise of M&A activity, internal succession structures, and the often misunderstood world of financing advisor transitions. The discussion centers on the emotional, financial, and strategic considerations of passing the torch from one generation of firm leaders (G1) to the next (G2, G3), and explores how firms can effectively plan for enduring business value, leadership stability, and internal talent development.

Key Discussion Points & Insights

1. The Central Dilemma: Succession in High-Value Advisory Businesses

Challenge: Firms are perceived as so valuable that the next generation feels unable to afford to buy in.
Founders built businesses with sweat equity; now, internal buyers must contend with market-value transactions that often require significant financing or loans.
Quote:

"These businesses are often perceived as being worth so much that no one can afford to buy them... The cost of doing a market transaction for Generation 2 is one of the hurdles..."
— Matt Crow (01:46)

2. Education & Awareness on Internal Succession

Many advisors are unaware internal succession is a viable option, mainly due to the nascent state of bank financing for these deals.
Trends:
- Internal succession requires significant advance planning—ideally a decade out.
- Many G2/G3 leaders are only now learning that financing is available to help them buy in.
Quote:

"More internal successions don't happen because it does require considerable planning. A decade or more in advance is ideal."
— Erin Hasler (02:35)
"Bank financing is still relatively in its infancy... even for us, we've been doing commercial financing since 2018 and it's really only in the last four years that we've been able to make it a replicable, consistent product."
— Erin Hasler (03:33)

3. Strategy First: Clarifying Goals & Roadmaps

Guidance: Firms must rise above tactical considerations to focus on what they're truly trying to accomplish through succession—strategy, personnel, and vision.
Both guests urge stress-testing existing strategies and recommend regular, structured conversations to guarantee alignment.
Quote:

"Looking at succession as a process, not an event, can be a way to soften what appears to be just an enormous and unyielding number."
— Matt Crow (07:38)

4. The Valuation Myth & Pricing Dynamics

The media’s focus on high deal multiples “skews” seller expectations; actual terms are usually lower after contingent payments and equity considerations are factored in.
Many transactions are done with only informal ("back of a napkin") valuations, which can muddy expectations and outcomes.
Quote:

"There is... an aura around the M&A landscape... big numbers get eyeballs for trade publications... but on a dollar for dollar basis, it's maybe not as good as it looks."
— Matt Crow (08:23)

5. Generational Partnership Strategy

Firms with demographic spread among advisors (G1, G2, G3) are healthier, with greater longevity and more stable successions.
Internal succession planning is more sustainable when each generation is actively developing the next, with G2 and G3 servicing the evolving needs of clients.
Quote:

"If we have advisors that are spaced apart demographically by a decade or so, you have a much healthier ecosystem in a firm."
— Erin Hasler (11:47)

6. Leadership Beyond Ownership

Buyers and sellers (both internal and external) must recognize the separate but critical need for ongoing leadership development—even if ownership gets transferred, leadership must endure for organizational health.
Quote:

"Even if you're selling the firm to an outsider, that doesn't absolve the organization of the responsibility... You've got to have the next generation of leadership."
— Matt Crow (13:43)

7. Identifying & Developing Next-Gen Leaders

Balanced teams consist of both "builders" and "maintainers." Many founders have chosen maintainers for day-to-day, then find themselves wanting more entrepreneurial qualities in G2.
Investment in future leaders is vital regardless of whether a sale is internal or external.
Quote:

"It's difficult for a firm that's smaller than, you know, pretty substantial size to actually sustain itself without having some builders involved in the leadership of the organization."
— Matt Crow (15:40)

8. Evolving Deal Structures

Modern deals are less one-to-one and more commonly "one-to-many" (i.e., one founder sells to several successors). This provides diversification and a stronger talent pool.
Structuring typically blends upfront cash (to incentivize founders), staged payment tranches, and debt serviced by expected cash flow.
Deals are increasingly tailored to timelines (e.g., compressed for older founders), with flexibility to weather market events.
Quote:

"We're looking at... what's the available cash flow based on the valuation... Sometimes we're even working backwards and saying to get to a ballpark value, what's the available cash flow to service the debt?"
— Erin Hasler (21:13)
"One thing I try to do with clients is to say, all right, well, five years hence, what does this need to look like? Where's the business going and what's the ownership model that's going to serve that business model?"
— Matt Crow (22:11)

9. Talent Shortage & the Importance of Equity

Industry faces a predicted shortfall of 100,000 advisors by 2035.
Equity opportunities attract essential next-gen talent; early, even small tranches help align incentives and long-term participation.
Quote:

"You're attracting the right talent with the opportunity for equity. You're buying in in small tranches... and then you can really build an outstanding internal succession plan."
— Erin Hasler (24:27)

10. Emotional Gaps & Intergenerational Dynamics

The psychological overhang is huge; making transitions a staged process rather than a single event helps mitigate emotional and business risk.
G1 to G2 is usually the hardest transition. Subsequent handoffs (G2 to G3) tend to go smoother due to established paths and broader ownership bases.
Quote:

"The transition from G2 to G3 is much easier than from the founding G2 and G3 understanding."
— Matt Crow (26:49)
"It's such a great education for the buying generation... So to expect that your G2 or G3 is just going to know exactly what they should do... if it's just being dropped into their lap is naive."
— Erin Hasler (25:19)

11. Financing & Misconceptions

Biggest misconception: Many still do not know external financing exists or how accessible it can be—banks now underwrite businesses more based on enterprise cash flow than G2's personal net worth.
Quote:

"The requirements for G2 or G3, because we have an established enterprise, are less. In terms of G2 does not need to have a million dollars in their 401k to qualify for a bank. It's really the cash flow, it's the reputation."
— Erin Hasler (30:32)

12. G2/G3 Initiating Succession Conversations

With talent shortages, G2/G3 have growing leverage:
- They can and should start proactive discussions about vision and personal opportunities with G1(s).
- If G1 is unresponsive, younger talent may look elsewhere.
Quote:

"G2 and G3, because there is such a talent shortage, have tremendous power. The best way... for a G2 is to approach leadership and say, 'This is what I like about this organization... Tell me about your succession plan. What's your vision for the firm?'"
— Erin Hasler (32:08)

13. The Role of Regular Valuations

Annual (or at least regular) formal valuations are underutilized but can help demystify the process, manage expectations, and provide benchmarks for strategic decisions.
Quote:

"If I'm G2 or even G1, calling Matt up every year and looking at the valuation and understanding what we should be doing on a year over year planning basis to increase that valuation seems like money well spent."
— Erin Hasler (34:26)

14. Structural and Technical Considerations

Succession planning may prompt a review or change in corporate structure (e.g., S Corp → LLC); cash flow benefits (e.g., amortization of purchase price) are a key consideration.
Staged buy-ins and cash flow modeling are standard to ensure deals are resilient to market downturns or talent events.
Quote:

"The structure of the deal typically has a lot to do with... the players involved, but also the business model and the culture. What are they trying to ultimately achieve?"
— Matt Crow (22:11)

15. Buy-Sell Agreements and Operating Agreements

Frequently, buy-sell provisions are inadequately specified; clarity on triggers and process is critical for smooth transitions.
Founders often fear loss of relevance—maintaining a small founder's stake or clear advisory/chairman roles can help.
Quotes:

"The buy sell mechanism is oftentimes very, very poorly inadequately written."
— Matt Crow (46:53)
"Founding generation might still have control, a minority control position, but still in more of a chairman leader role... a well-crafted partnership agreement... can help you navigate through those."
— Erin Hasler (48:31)
"G2, it's a little bit more of an economic transaction and founding generation, it's more emotional."
— Matt Crow (50:16)

Notable Quotes & Memorable Moments

On Succession Hurdles:

"These businesses are often perceived as being worth so much that no one can afford to buy them..." — Matt Crow (01:46)
On Financing Awareness:

"I make the joke that I don't think there's a financial advisor in the country that has a chief credit officer at a bank as a client... because if they did... these chief credit officers would be calling wealth management firms directly..." — Erin Hasler (03:25)
On “Big” Multiples:

"There is... an aura around the M&A landscape... big numbers get eyeballs for trade publications... it's maybe not as good as it looks." — Matt Crow (08:23)
On Partnership Strategy:

"If we have advisors that are spaced apart demographically by a decade or so, you have a much healthier ecosystem in a firm." — Erin Hasler (11:47)
On Internal Talent:

"You're attracting the right talent with the opportunity for equity... buying in small tranches..." — Erin Hasler (24:27)
On Transition Pain:

"The transition from G2 to G3 is much easier than from the founding [generation] to G2." — Matt Crow (26:49)
On Emotional Aspects:

"G2, it's a little bit more of an economic transaction; founding generation, it's more emotional." — Matt Crow (50:16)

Timestamps for Major Topics

[01:46] – The dilemma of high valuations & financing internal succession
[02:35] – The role of education and early planning
[04:51] – Emphasizing goals & strategy before tactics
[08:23] – M&A multiples: Myth vs. reality
[10:50] – Generational partnership strategies & the value of demographic diversity
[13:43] – The enduring need for leadership, not just ownership
[15:40] – Criteria for next-gen talent and builder vs. maintainer distinction
[19:04] – Shift to “one-to-many” successions
[21:13] – Financing and deal structure specifics
[24:25] – Talent shortage & small equity tranches for new entrants
[26:49] – Why the first succession is hardest; emotional vs. economic transitions
[30:26] – Biggest misconception: external financing is not viable
[32:08] – G2/G3 taking initiative on succession
[34:26] – Importance of formal, recurring valuations
[40:19] – Succession-driven changes in corporate structure
[42:10] – What happens when loans or payments falter
[46:53] – Buy-sell and operating agreement blind spots

Final Takeaways

Start Early: Proactive planning, education, and clear communication among generations are essential for a successful, sustainable succession.
Embrace Financing: Bank lending for internal successions is not only available, it's increasingly sophisticated and flexible.
Strategic Talent Investment: Recruiting, nurturing, and incentivizing next-gen talent with equity is mission-critical for long-term firm durability.
Documentation Matters: Well-crafted partnership/operating agreements and regular valuations reduce ambiguity, emotional stress, and future friction.
It's Emotional and Practical: Appreciation of the emotional weight for founders and a process mindset—“succession as a process, not an event”—are key.

Next Steps for Listeners:

Begin open conversations about succession vision and timelines within your organization.
Seek annual or regular formal valuations.
Engage with external partners and experts to stress-test your strategy and documentation.
Invest intentionally in developing G2 and G3—and regularly revisit whether your plan is built for the next transition.

Find the Guests Online:

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