Regrets, confessions and hard sought learnings in the RIA Acquisition and Merger world

The honor and challenges of working on acquiring some of the largest and most successful wealth advisory firms in the U.S. has often left me pondering how I might have done things better.   Moments of elation upon completion of the acceptance of an offer were sometimes followed by despair, as seemingly insurmountable difficulties rose during integration. Negotiating the acquisition of a group of partners hard-built firm was fraught with intense emotional moments and hard talks crammed with hard realities on both sides.   I felt first-hand unbridled excitement when parties across the table agreed upon the final deal constructs in acquiring multi-billion asset firms.   On the other side of closure begins the challenging integration journey.   Both sides marshal teams seeking mutually acceptable outcomes aligned with the original deal.   Everyone carefully weighs complex elements for optimal outcomes across a plethora of operational, investment, regulatory and business financial requirements.  

In that mix is the most important aspect of continually satisfied clients.   My post-assessments lead me to find agreeing on “the number” and payouts associated, was usually one of the more quickly achieved aspects.   The true test of success was never the signing of the closing papers, but instead the hard sought smooth integration in the following years after leaving the closing table.   Letting go, or altering deal elements once thought critical becomes a necessity whenever it came to keeping clients happy.  

Inexorably linked to keeping clients happy was the ability to keep your advisors productively satisfied, confident and happy with the firm’s operation and portfolio results.  I quickly learned that you cannot buy culture, any more than you can actually own the client.   You must earn the right to be at the table with the client as much as the right to be at the table with the advisor.   The advisor/client and advisor/firm relationship are key aspects to cultural alignment.

One of my first and more valuable hard learnings is you must be willing to find agreement on the amorphous aspects of cultural alignment.   Knowing the advisors, their clients and how partners and employees prioritize, manage, communicate and achieve objectives together is difficult given it is one of the “soft elements” of the firm.   In this segment of finance, we have a predisposition to focus first on more “hard numbers” where our comfort zone is.   However “soft” cultural elements may be, don’t underestimate their importance.  

Take the time upfront to ensure a comfortable alignment exists or you will pay an exorbitant and painful price later.