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Q2 hedge fund letters, conference, scoops etc
Having worked with advisors the last dozen years, I have seen the good, bad and disastrous as it relates to M&A transactions. There is always focus on the valuation and the payouts, which are critically important. But what is often be missing in the process are the emotional considerations that can be more difficult to discuss and therefore easier to avoid. However, not exploring these aspects of a potential transaction can be very problematic in the long run.
When my children were very young we needed to decide on a guardian for them if something happened to my husband and me. We tried to have the discussion many times but it was so emotional and we just couldn’t agree on who would be the most suitable person. So we went without a guardian; we avoided the painful decision and prayed that all would be ok. As soon as my sister was engaged, we spoke to her and her fiancée and they agreed to this responsibility — a load off our minds! Advisors often avoid the more emotional considerations of a potential deal. It’s hard to work to manage through the emotional aspects of any decision!
When advisors are clear on their quantitative and qualitative goals for the transaction, they can build a framework for exploring these topics with the other advisors involved in a potential deal. Areas that an advisor should explore include but are not limited to:
Leadership style
How would you describe the current leadership style that drives the culture of the firm? What’s most important for you to preserve as you consider an acquisition, sale or merger of your practice? Post-transaction, who is running the firm? Are there two CEO’s? If yes, how are decisions made? Do partners all have decision rights? Do you need to create a different governance model? Can you agree on one? If no, what are the respective roles of the head of each advisor firm?
Vision for the firm
Be honest with yourself on how you see the firm in five years. How large is the firm? How many employees? Locations? What are the demographics of your client base? What new services are you providing? Be clear on your vision and goals and then compare these with the advisors involved to acknowledge where there is alignment and work through the differences. If you cannot reach agreement on the differences, walking away may be the best decision.
Client acquisition
How do you engage in business development activities today? Who is responsible? One person or a team? Do they have clear metrics for new business or is it less formal? How do you handle COI engagement and client referrals? What do you want to retain about your sales process and what are you looking to improve? Does a potential transaction help or hinder this process? Are you regionally focused, nationally focused? How does the transaction impact your regional footprint? Will it feel too big for you or is that what you’re looking for?
Read the full article here by Meg Kelleher, Advisor Perspectives
