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How To Do A Claw Back On An Advisor Acquisition

How To Do A Claw Back On An Advisor Acquisition
How To Do A Claw Back On An Advisor Acquisition In a previous post we discussed a few of the protections buyers can put in place to preserve their interests during an acquisition. The primary purpose of the protections is to minimize client attrition and preserve the value of the practice being acquired. One of those protections, a claw back, is one that M&A experts most highly recommend for protecting buyers and ensuring seller participation in the transition of clients. In this post we will discuss the mechanism for how a claw back works on an advisor acquisition. As a rule of thumb, a claw back clause states that if a certain percentage of assets aren’t transferred within the claw back period (usually 12 months), then the purchase price is adjusted to reflect the attrition of client assets. Buyer and seller can agree to any percentage, but the industry standard is a 90% retention rate (so maximum 10% decrease in assets) within the 12-month period. In terms of the actual

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