The ClientWise Blog

Growing a Financial Advisory Business thru Mergers and Acquisitions

Posted by Ray Sclafani on May 17, 2018 11:22:33 AM

Mergers & Acquisitions

How three unique firms found common purpose in coming together

Rick Kent (founder of the suburban Atlanta-based Merit Financial Group) was actively seeking to grow his business – both organically and acquisitively. The former approach was yielding tremendous success, while the latter was proving to be a far more difficult challenge.

There’s no question that mergers and acquisitions of advisory practices are complex and emotionally-charged undertakings. Keep in mind that the seller is considering relinquishing control not just of an asset, but essentially of their life’s work. In many instances, their practice is tantamount to an adjunct family member. It’s a stumbling block that Kent had become all too familiar with. “The seller wants a deal to come together, but psychologically there’s a deep seated fear that when they pull away from the business, everything’s going to crumble,” according to Kent. “It’s far less about the money and price of the deal, and far more about the psychological impact of selling the business. There needs to be an extraordinary amount of trust established for any deal to succeed.

That’s where the ClientWise Business Builder Workshops proved invaluable. A staunch advocate for these quarterly leadership workshops, Kent points to the value of baring your soul among your peers – honestly discussing your challenges, your victories, your strengths and your weaknesses. “You put yourself in a vulnerable position,” he explains. “But in doing so, that’s how great relationships are ultimately established.

One of the firms that eventually joined forces with Merit was a long-standing relationship where occasional discussions regarding a potential merger had failed to gain traction. “I strongly encouraged the founder and her COO to become part of these workshops with the promise that it would be invaluable in helping them transform the way they do business,” Kent recounts. “Their participation in those meaningful conversations proved to be a tremendous unifying impetus for our firms to finally come together.” The other firm in the recent merger was actually a practice that Merit never had a single interaction with prior to meeting in the Business Builder workshops. Yet the bonds forged during that time together and the mutual knowledge exchange helped the firm’s principal realize, when the time came to find a partner, that Merit would be an ideal fit.

Merit’s 8 Keys to Successful M&A

  1. Remember that momentum is vitally important. If you lose momentum, it’s easy for people to change their mind as there are so many questions running through their head during any M&A process.
  2. Make sure that every conversation is focused on the potential benefits of coming together. Idle time and directionless conversations are the ultimate deal killers.
  3. Strive to create and maintain a sense of urgency with milestones and deadlines.
  4. Continue to focus your conversations on what’s best for the clients, what’s best for the employees and what’s best for the owner(s).
  5. Make sure the cultural fit is strong. Both parties need to be willing to change and adapt, but the acquiring firm MUST keep the promises of the acquiree.
  6. Deal communication can be a challenge but is critical. Don’t let the teams feel out of the loop. Solid communication is not only the lifeblood of your business, it’s the oil that will help smooth the wheels of a deal and improve the likelihood of a successful transition.
  7. Anytime two or more firms come together, a new common intent and purpose must be forged that combines the essential components of the merging organizations.
  8. And don’t lose sight of the fact that belief systems don’t change overnight. It takes time to fully integrate and coalesce.

With the combined strength and scale of these three firms, Merit has now created a super OSJ with 46 advisors and $2.6 billion in assets under management. It’s anticipated that the merger will help fuel growth to $6 billion within three years and $10 billion five years from now…all due in part to ClientWise’s Business Builders Academy.

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