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Main Subject - Maximizing the Value of Your Business at an Independent Broker Dealer (Beware the B-Myth)
Changes, changes, changes. You can’t pick up a Wall Street Journal on a given day without finding that one company has been bought by another. Most of the time you can’t pick up one of the trade magazines in our business without finding that an independent broker-dealer has been bought by another independent broker dealer or
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
an RIA has been bought by another RIA.
All this activity has to make you wonder: Why are all these people doing this? Are they trying to get their equity out of the business? Are they trying to preserve their businesses for a loved one? Are they trying to derive some economies of scale and some synergy by joining forces
All this activity has to make you wonder: Why are all these people doing this? Are they trying to get their equity out of the business? Are they trying to preserve their businesses for a loved one? Are they trying to derive some economies of scale and some synergy by joining forces
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
? Are they trying to gain some strength to protect themselves from the competitive onslaughts that are coming from every direction in the independent broker dealer, financial planning and investment advisory arenas? Yes, probably all of these reasons and many more.
Your independent broker dealer has a business. Do you? May
Your independent broker dealer has a business. Do you? May
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
e you do. Maybe you don’t. Maybe you just think you do! Maybe you’re wondering what you should be doing with this work area to which you report to every morning, this gaggle of clients that depends on your every move, these employees who support you on a day-to-day basis. Maybe you’re tired and want to slow down. Maybe you’
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
re just burned out from dealing with the everyday hassles. Maybe you’re excited about your work and want to see it grow. Maybe you’re looking for a sensible and profitable exit strategy. Whatever your scenario is, start thinking about your practice and make a conscious decision about whether it is positioned the way you wan
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
it to be. Don’t be caught up in “The B Myth.”
The B Myth is my terminology for the situation where a broker, financial planner or investment adviser is under the illusion that he has a “business” when in actuality all he really has is a job. As John Bowen, a senior consultant in this area, says, “If you build a system whi
The B Myth is my terminology for the situation where a broker, financial planner or investment adviser is under the illusion that he has a “business” when in actuality all he really has is a job. As John Bowen, a senior consultant in this area, says, “If you build a system whi
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
ch revolves around you, it is difficult to transfer the business to anyone else. You own a job, and it’s hard to sell a job.” Yes, I know. When you went in the financial services business someone told you that “you were in business for yourself, that you were building something for yourself.” In truth, that’s what you may ha
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
ve done -- built something for yourself -- which nobody else wants because it has little or no value to anyone but you. Beware the “B Myth!”
Some of you may be asking yourselves, “Haven’t I heard of this B Myth before?” Well, actually my concept is borrowed from one outlined by author Michael Gerber in his best-selling boo
Some of you may be asking yourselves, “Haven’t I heard of this B Myth before?” Well, actually my concept is borrowed from one outlined by author Michael Gerber in his best-selling boo
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
s, The E Myth and The E Myth Revisited and applied to our industry. The sad fact is many financial planners and financial advisers with independent broker dealers are suffering from the illusion that they have a business. In fact, what they do have is an unreliable stream of income, a lease, some employees, a group of clien
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
ts, some commercial software, and some fixtures and equipment worth only 25 cents on the dollar.
The reality is this: The stream of income is a mixed bag of financial planning fees you generated, commissions you generated, and a slice of RIA fees that is growing slowly and is dependent upon your efforts to sell the client
The reality is this: The stream of income is a mixed bag of financial planning fees you generated, commissions you generated, and a slice of RIA fees that is growing slowly and is dependent upon your efforts to sell the client
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
n this way of doing business. Your assistants or employees may not know what to do unless you are around to tell them and might scatter to the wind if they thought the business was for sale. Your clients think you walk on water because you have convinced them that you are what is indispensable rather than the advice they r
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
eceive. In this scenario, hopefully you have been a good saver because there will not be much equity in your “business" to sell.
Have I given you some food for thought? If so, here are some of the things you can do to make your “business” more attractive to a potential buyer, more reliable and supportive to your clients, a
Have I given you some food for thought? If so, here are some of the things you can do to make your “business” more attractive to a potential buyer, more reliable and supportive to your clients, a
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
nd in the process more valuable for yourself -- whether you ever sell it or not! A good friend of mine (let’s call her Jane) who was successful at selling her investment advisory practice in California offers some key points to create maximum value in your business:
· Accept the fact that making your business attractive to
· Accept the fact that making your business attractive to
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
buyer and building value normally takes some time: Time to streamline operations and build teamwork among staff; time for you to aid in the transition of clients after the business has been sold.
· Don’t make your clients suffer under your own “myth of indispensability.” Being indispensable leaves your clients vulnerable w
· Don’t make your clients suffer under your own “myth of indispensability.” Being indispensable leaves your clients vulnerable w
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
hen you are gone -- for any reason. Instead create systems within your office that deliver whatever you deliver in a consistent way regardless of whether you are there or not. That’s what successful franchises do.
· Understand that a knowledgeable potential buyer is looking for a documented stream of revenue over a period
· Understand that a knowledgeable potential buyer is looking for a documented stream of revenue over a period
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
f time. Different revenue streams have different values. Commissions and one-time fees have much less value than consistent, annual investment advisory fees or consistent mutual fund trails.
· Valuing your business can be tricky. First ask yourself what you would reasonably pay for what you have. Then consult with a profes
· Valuing your business can be tricky. First ask yourself what you would reasonably pay for what you have. Then consult with a profes
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
sional. Mark Tibergien of the management advisory services of Moss Adams, LLP in Seattle stresses the importance of “free cash flow” as a valuation measure -- net profitability of your business adjusted by fair market compensation for you and any other principals. To prove profitability and determine free cash flow, you have
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
to keep good records. Knowledgeable buyers will normally ask for two to three years of records.
· Qualify your buyer: Does the buyer’s personality and style fit your clients? If a buyer scares the clients, they will leave and your ability to maximize the value of your business will be limited. Does he have the money to
· Qualify your buyer: Does the buyer’s personality and style fit your clients? If a buyer scares the clients, they will leave and your ability to maximize the value of your business will be limited. Does he have the money to
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
ay (cash and good credit)? As John Bowen points out, “Make sure that you are not taking all the risk in the transaction.”
Falling victim to the “B Myth” is easy to do but also avoidable with some awareness and planning. Do you want to own a “business” rather than a “job”? Then do what Michael Gerber suggests: Think about
Falling victim to the “B Myth” is easy to do but also avoidable with some awareness and planning. Do you want to own a “business” rather than a “job”? Then do what Michael Gerber suggests: Think about
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
your practice as if it were the prototype for a network of 5000 outlets. At McDonald’s, the franchise owners don’t flip the burgers, but the franchises have tremendous value because they have installed the systems that turn out a very consistent product or service in the absence of the owner. Something for you to consider
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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