Steady Your Trajectory for Successful M&A: How to create more harmonious relationships and predictable outcomes without making your attorney rich in the process

– Insights from Brian Hamburger at our 2025 ClientWise Ensemble Leaders’ Summit –

At the ClientWise Ensemble Leaders’ Summit, Brian Hamburger delivered a blunt reality check on the state of M&A in wealth management. The financial industry press is relentless with aspirational headlines about M&A deals – the deals that get done, and headline numbers in terms of the economics and the multiples. You see 50 to 55 deals being executed each quarter, and it's tempting to fall prey to either a sense of FOMO or a sense of insecurity that you need to go out there and just do more.

But the truth is, if you had a chance to sit inside the boardroom of some of these elite firms that seem almost invincible, you'd find often potentially dangerous cracks beneath the surface. Cracks that, when ignored, can not only prevent a firm from reaching its full potential but even cause firms with great momentum to collapse. The majority of these cracks? Weak foundations and poor planning—flawed structural agreements and governance decisions that seemed minor at the time but, in hindsight, lead to significant slowdowns in growth.

The main problem in our business isn’t a slowdown in growth; most companies still succeed even during tough markets. The real issue is that the foundation they rely on isn’t stable or strong enough to support that success. Elite firms don't need to move faster; they need to build a firmer base.

When a firm sells for a headline figure (for example, $22 million), what the press often omits are the contingencies: how much of that amount is tied up in multi-year earn-outs, and what the firm could have sold for if it had been built with sale-readiness in mind all along.

In reality, most transactions are fueled by uncertainty among firm principals. A health scare, a pact with a spouse, or a sudden realization prompts an unplanned transaction. Unfortunately, these unprepared firms tend to sell at a significant discount compared to what they could potentially secure if the transaction had been part of a three-to-five-year objective, built into their disciplined strategy.

3 Common Cracks That Undermine M&A Success

The momentum of a growing firm often masks these three recurring and dangerous flaws:

1. Generic Agreements and Kitchen Sink Traps

It's tempting for firms to rely on off-the-shelf templates, borrow agreements from others, or have attorneys include "every clause imaginable" just in case. However, litigation attorneys often favor these generic, boilerplate documents since they can be quickly rendered unreliable and unenforceable due to variations across states.

For example, we often see buy-sell agreements that do not specify what happens if a partner becomes disabled, or vendor agreements that lack clarity on responsibilities when issues like a data breach occur.

2. Handshake Partnerships

While admirable, an ‘insatiable belief in the goodness of people’ can be potentially dangerous in a business setting. Partners working side-by-side for 15-20 years based solely on trust, without any formal partnership structure or mechanisms, are simply heading for trouble.

These partnerships often lack a voting system, a tiebreaker mechanism, or any formal process to handle major disagreements. This creates pressure that can lead firms to collapse later on—especially when unplanned stakeholders are involved, such as a partner’s new spouse or their estate after a death. Elite advisory firms, however, promote civil disagreement because they have a formal structure to manage and resolve conflicts.

3. Impractical Succession Plans

On paper, nearly every advisory firm has a succession plan, but too often they are vague, underfunded, and implemented far too late. Since these plans are usually linked to uncomfortable topics like death or disability, procrastination is common.

Even when a firm identifies a next-generation leader, if the financing is never secured to complete the transaction, the plan becomes meaningless. Additionally, bringing in outside capital, especially minority investors, can introduce new covenants that effectively restrict successors and prioritize the investor's payout – potentially undermining the firm's cultural fit and future performance. Succession should be viewed as business continuity, not just an exit strategy.

Warning Signs & Real-World Consequences

Fractures rarely happen without warning. The most effective advisory leaders learn to recognize subtle signs that might indicate underlying problems.

I clearly recall a $2 billion firm that lacked any kind of redemption mechanism. Thanks to a solid valuation process, the firm partners knew their share value but had no way to exit the business. Once the first partner decided he was ready to exit, the remaining partners all realized they would need to pay for the financing, which triggered paralysis and a stampede to the door as everyone scrambled to avoid being the last person left ‘holding the bag.’

A Blueprint for Disciplined Growth and Clarity

The key to a successful and predictable M&A journey is establishing strong governance – the unseen framework that differentiates fragile companies from resilient ones. Governance brings order to chaos, enabling partners to speak honestly because the resolution process is already in place.

• Start Customizing Your Agreements Today
  

The longer you wait, the more costly and complicated the fixes will become. Steer clear of generic agreements and instead tailor them to match your firm's unique economics, governance, and culture. An agreement is a continuous process, not just a one-time event.

• Align Economics and Culture

Take time to step back and make sure your firm’s financial structure (economics) and core DNA (culture) are fully integrated and working in harmony. If they’re misaligned, that conflict will appear in every major decision and weaken common goals.

• Build Governance from the Start

Incorporate governance from the beginning, covering key topics like buyout provisions, non-solicitation, valuation methods, and voting control. This won't slow your firm down but will instead provide the clarity and independence needed to operate quickly. Management by committee rarely works; governance should empower professional management while setting clear thresholds for partner votes (e.g., major capital expenditures, changes to legal structure, etc.).

The largest enterprise firms, like Merrill Lynch, built structures designed to outlast their founders. This should be the ultimate goal for every advisor: to create something that will endure. By focusing on preserving value, aligning interests, and safeguarding decision-making through proactive governance, firm leaders can avoid costly litigation driven by attorneys and instead foster harmonious relationships and predictable results—key markers of a truly successful, resilient enterprise.

Coaching Questions:

1. Where are the current cracks in your firm’s foundation, and what steps will you prioritize today to address them?
2. What are the three most critical operational and partner-exit scenarios (such as disability, major disagreement, or valuation dispute) that your firm's customized agreements currently do not clearly or specifically address, and how can you close those gaps?
3. How can you better assess whether your current valuation formula and ownership structure (economics) truly align with the behaviors and long-term goals (culture) of all partners, and what governance changes could you implement to correct any misalignment?

About ClientWise LLC
ClientWise is a leading business and executive coaching firm serving financial professionals. We help advisors, managers, and executives grow revenue, build high-performing teams, and achieve measurable business results. Our certified coaches, members of the International Coach Federation (ICF), provide customized, action-oriented solutions tailored to each client’s goals and challenges.

With deep expertise in the financial industry, ClientWise empowers firms to enhance performance, improve client engagement, and develop next-generation leadership. Our mission is simple: help financial professionals get clear, get focused, and get results.

Questions Financial Advisors Often Ask

What are the main risks that can undermine M&A success in advisory firms?
The main risks include generic agreements and “kitchen sink” legal traps, handshake partnerships without formal governance, and impractical or poorly funded succession plans. These cracks can prevent firms from reaching their full potential or even cause collapse.

How can advisory firms recognize warning signs before M&A problems occur?
Warning signs include outdated or boilerplate agreements, lack of contract management, stale valuation formulas, and silent or disengaged partners. Early recognition allows firms to address issues before they escalate into costly problems.

How should advisory firms approach agreements to avoid legal pitfalls?
Firms should customize agreements to match their unique economics, culture, and governance structure. Agreements should be continuously reviewed and updated, avoiding generic templates that can be unreliable across states.

Why is aligning economics and culture important in M&A planning?
Misalignment between financial structure and firm culture can create conflict in every major decision, weakening common goals. Aligning economics and culture ensures smoother operations, predictable outcomes, and better partner relationships.

What are key steps to build a disciplined M&A framework?
Advisory firms should (1) customize agreements, (2) align economics and culture, and (3) implement governance from the start. This proactive approach preserves value, safeguards decision-making, and fosters harmonious relationships.

How can firms improve succession planning for M&A?
Succession plans should be specific, funded, and implemented early. Firms should secure financing, align plans with cultural and economic goals, and anticipate outside investors’ influence to maintain continuity and long-term success.