Often this is the one area that is most underestimated by advisors who have bought or sold a practice.
This is also the area that most of the value of the transaction is realized through the transfer of clients from one firm to the other so it warrants just as much time, effort and resources as that which went into the transaction.
Because the good will of the client base is the actual asset that is being transferred, a lot of focus needs to be placed on building a strategy and game plan to make that happen in an efficient and clean way.
The primary reasons mergers and acquisitions fail are:
- There wasn’t a clear strategy as to why the parties should do the deal.
- Cultures and practice philosophies weren’t compatible.
- Expectations of the parties were unrealistic.
Some key considerations for making the sale work:
- Maintain control – do not let one side or the other dictate the process.
- Do not get distracted – stay focused on the outcome and the goal.
- Maintain confidentiality – do not let information get outside the core group as it can lead to confusion and the potential for key employees or clients to consider leaving before the deal is done.
- Establish a single channel of communication – don’t let multiple voices create confusion or side-track the progress of the transaction.
- Maintain flexibility – often new information will be discovered in the transition process, and you need to be able to adapt your approach.
- Maintain momentum – determine your timetable, outline the steps and timing and stick to it.
- Be realistic – be prepared to walk away at any time if it doesn’t fit.
