By Debbie Dry, Group Acquisitions & Integrations Director
In most UK advice-firm sales, the seller gets part of the price on completion, commonly 30% to 50%, with the balance deferred over 2 to 4 years. The deferred part might be fixed instalments, earn-outs linked to performance, or subject to clawback if clients or assets leave. The structure usually matters more to the final outcome than the headline price.
Buyers don’t defer payment to be difficult. Structure is how a buyer protects against risk, and how the risk gets shared between the two sides. A seller who understands the standard shapes can negotiate them. A seller who only looks at the headline can’t.
The standard shapes.
Upfront plus fixed deferred. The simplest structure: an amount at completion, then fixed instalments at agreed dates. Sometimes there are simple conditions, such as the seller working an agreed notice or handover period.
Earn-outs. Here the deferred element varies with performance after completion, usually measured by recurring revenue, funds under advice, or client retention over 2 to 4 years. Earn-outs align incentives in principle. In practice, everything depends on what’s measured, over what period, and how much influence you still have over the result once the buyer controls the business.
Clawbacks and retention adjustments. Instead of paying extra when things go well, these let the buyer reduce or reclaim payments if too many clients leave, say, clients worth more than a set share of recurring revenue walking within the deferred period. It’s the mirror image of an earn-out: the same economics, dressed as downside protection for the buyer rather than upside for you.
Equity or loan-note consideration. Some buyers offer part of the price in their own shares or loan notes. This can work well. It can also turn a known sum into exposure to a business you don’t control and can’t easily sell. It deserves the same scrutiny you’d apply to any concentrated investment, including the question of what your paper is worth if the buyer’s own plans change.
Most real deals combine several of these. None of them is inherently unfair. The fairness lives in the details.
Where sellers get caught.
After years of watching these mechanisms operate, the recurring problems are remarkably consistent.
Measures the seller no longer controls. Your payment depends on revenue or profit, but after completion it may be the buyer who sets the charging structure, the service model, the platform and the pace of integration. Choices they make for perfectly good group reasons can still pull down the very number your earn-out is measured against. Profit-based earn-outs are worse for this, because group management charges and cost allocations can land on your P&L. A measure built on revenue or client retention is usually cleaner for the seller, simply because fewer hands can reach it.
Cliff edges. Watch for thresholds where missing a target by 2% wipes out 30% of the payment, which is how disputes start. A graduated scale, where the payout moves smoothly with the result, is worth pushing for.
Integration during the earn-out. If the buyer plans to rebrand, change charges or migrate platforms during your earn out period, your client retention risk is potentially impacted. At minimum, understand the integration timetable before agreeing a retention-linked structure. What integration looks like from the client side is covered in what happens to your clients.
Funding and covenant risk. A deferred payment is an unsecured promise unless the contract says otherwise. Ask how deferred payments are funded and what protections exist. The answer tells you something about the buyer beyond this one deal. The FCA’s October 2025 review of consolidation in this sector specifically examined the use of debt in acquisition structures, which makes the funding question a fair and informed one to ask any acquirer.
Comparing offers properly.
Two offers, side by side. Buyer A: £4.0m headline, 50% on completion, the rest an earn-out over three years measured on profit after group charges, with a cliff at 90% client retention. Buyer B: £3.6m headline, 70% on completion, the balance in two fixed instalments subject only to an attrition adjustment above a generous threshold, with carve-outs for deaths and planned decumulation.
The right way to compare them is to price the risk. What do you realistically expect to receive under each, and what has to go right for the headline to arrive in full? Under most assumptions, B’s certain £2.52m on day one plus near-certain instalments beats A’s £2.0m plus a contingent promise measured on numbers A controls. Sometimes A is still the better deal. You can’t know without modelling both, and an accountant who has seen advice-sector earn-outs will earn their fee several times over here.
A word on tax while you’re comparing. Deferred and contingent consideration can be taxed in ways that catch sellers out, and the timing of the disposal interacts with Business Asset Disposal Relief, now 18% on a £1m lifetime limit. The time to take that advice is before you sign heads of terms, while you can still change the structure. Where all this sits in the wider process is covered in the step-by-step guide.
Questions to ask any buyer about structure.
What exactly is measured, over what period, and who can influence it? Can group costs or charging changes affect my earn-out? What happens to deferred payments if you resell the business, change its platform, or rebrand it during the measurement period? How are deaths and planned withdrawals treated in attrition tests? How are deferred payments funded, and are they secured? What did sellers from your last three acquisitions actually receive against their headline?
A serious buyer will answer all of these without flinching. The last one tells you the most.
Frequently asked questions.
How much of an IFA sale price is typically paid upfront? Commonly between 30% to 50% at completion, with the balance over 2 to 4 years. The right comparison is always the whole structure, not the upfront percentage alone.
What is the difference between an earn-out and a clawback? With an earn-out, part of the price is conditional and only paid if future targets are met. A clawback pays you sooner but lets the buyer take some of it back if retention or other measures fall short. Economically they overlap. Legally and psychologically they differ.
Are earn-outs bad for sellers? Not inherently. A well-designed earn-out on measures you can still influence, with graduated outcomes and honest carve-outs, can reward a good handover. Earn-outs on profit measures inside someone else’s group, with cliff edges, deserve scepticism.
Can I negotiate structure rather than price? Yes, and often you should. Shifting money from contingent to guaranteed, or off a profit measure onto a revenue one, can do more for what you actually walk away with than increasing the multiple.
Debbie Dry is Group Acquisitions & Integrations Director at Loyal North. She has spent more than 25 years in UK wealth management M&A and was previously Integration Director at Succession Wealth, where she oversaw 57 acquisitions.
Loyal North partners with established UK financial planning firms whose principals are planning the next chapter. An initial conversation is confidential and without obligation: For IFA principals.
This article is general information, not financial, legal or tax advice. Deal terms vary widely; take professional advice on any structure you are offered.