BUYER DILIGENCE
What an acquirer’s compliance team actually examines
The commercial diligence is about your revenue. The compliance diligence is about whether buying your firm imports a problem. It is usually the quieter workstream and it is where deals get repriced.
The compliance manual and whether you follow it
Having a manual is table stakes. Buyers test whether your actual practice matches it — annual reviews conducted and documented, code of ethics attestations collected, personal trading monitored. A manual that describes a firm you are not is worse than a thin one you actually follow.
Advertising and the Marketing Rule
Testimonials, endorsements, performance presentation and third-party ratings all carry conditions. Marketing that predates the current rule and was never revisited is a common finding — and one an acquirer will insist is remediated before or at close.
Custody, fees and billing accuracy
Billing errors are the single most common material finding: fees calculated on the wrong basis, households aggregated inconsistently, or a rate schedule in the agreement that differs from what was actually charged. Buyers sample invoices. Small systematic errors compound into a real number.
Books, records and continuity
Email retention, electronic communications policy including personal devices, business continuity and succession documentation. Under the Marketing Rule and books-and-records requirements these are examinable, and gaps are cheap to fix in advance and expensive to fix under deal pressure.
What a clean file is worth
A firm that hands over an organized compliance file signals a firm that is well run. That reads directly into the multiple, and it removes the buyer’s easiest argument for holding back consideration.
Not legal advice. Examination priorities and rule application depend on your facts. Work with your CCO and counsel.
What does a clean file add to the price?
Run a confidential valuation on our sister resource and see the range before you start remediating.
Sell My RIA Practice is an authorized lead-generation partner of buyAUM. buyAUM compensates us only if a transition is completed. Sellers are never charged a fee at any stage. Nothing on this site is legal, tax, or compliance advice.