Get What You Deserve: Compare Your Deal

Congratulations, you got a deal!  You read the deal components so you understand the concepts of up-front, non-contingent and back-end contingent.  But is it a fair deal?

The most effective way to determine this is to hire a compensation expert.  They will know how deals have been structured in your location and for your potential new firm nationwide.  If you want a personalized deal analysis and comparison, we can help.  If you are going it alone, here are some ideas:

Compare It to Your Other Deals
Each firm has a unique deal and they make it hard to compare one against the other.  You will need to understand each component intimately to accurately compare deals.  For example, is the back-end payment a percent of a “recognized T12” or “actual production”?  Is the up-front all cash or cash and stock?  What are the vesting periods of stock payments?  You get the idea.

If you have only one deal, get another.  You wouldn’t sell your house to the first bid, get a second opinion.

Use Your Network
You likely know several Advisors who have made a move.  Ask them what they received.  Realize, however, that their business profile and when they moved will impact the deal, so either discount or inflate your deal accordingly.

Gut Check
Nothing works like your own sense of fairness.  You trust the new manager; you spent a lot of time with him.  He knows your business and you put your best foot forward evaluating what clients would move with you.  If you are confident this is right, make the move.

At the end of the day, only you will know if the up-front is big enough to compensate you for disrupting your business and your clients; only you will know if you can achieve the hurdles on the back-end; only you will know if your hard-built business is worth the figures presented to you.