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Weathering the Merger Storm

Managing a Practice

Mergers and acquisitions (M&A) entail much more than mere dollars and cents – they’re also a death, a birth, a morphing, a creating. A panel at an April 9 session at the 2019 NAPA 401(k) Summit discussed some of the nuts-and-bolts aspects of melding two advisory firms into one. 

Panelists for “Selling ‘Points’: Effective Advisor M&A – Part 2” included moderator Abram Claude, Vice President of Learning Systems at Columbia Threadneedle Investments; Jim O’Shaughnessy, Managing Partner at Sheridan Road; Mary Caballero, Managing Partner, Impact Benefits; and Mark Davis, Senior Vice President and Financial Advisor at CAPTRUST. ((You can read about Part 1of the 2-part series of workshop sessions here.)

So what does a merger or acquisition mean to executives of the firms that are involved? 

You become a business leader. Caballero gained “a newfound respect” for her mentor when her new entity was born. “Take a good look in the mirror. Figure out who you are,” said Davis. 

It means growing pains. Maintaining effectiveness when transitioning from a small business to a large corporation is a challenge, remarked O’Shaughnessy. He added that it also can be a challenge to go from being a small operation to being part of something big and complex enough that it’s necessary to have a chief operations officer. Caballero added: “We’re in that weird place where we work all the time, and sometime we’ll make money.”

Pay attention to details. “Branding will probably change,” said O’Shaughnessy. Davis pointed out that one should remember that messages, communication and planning should reflect any additional time zones that now may be part of business operations. 

You’re building a culture. “It’s much easier to create a culture than change a culture,” said Caballero. Davis concurred regarding the importance of culture, telling attendees that it’s expected to grow the business, but that it’s most important to build the culture along the way. 

Remember client service. Davis stressed the importance of building a culture that will allow one to better serve clients. Caballero said, “I have a clear vision of who we are,” adding that she wants clients to feel a certain way. Caballero remarked that she likes to keep in mind the maxim that “you don’t have to be the best, you have to be people’s favorite.” And O’Shaughnessy offered a broader vision that service extends to the broader region in which a business is located; he suggested not selling one’s business to a buyer that would then take jobs away from the area. 

You will weather the storm. “Discount your expectations by at least 50%,” said Davis, adding, “Be surprised by the upside, not the downside.” O’Shaughnessy told attendees to “embrace failure” and to “pull up your bootstraps.” Caballero said that “starting was rough,” but that now they are in a more stable phase. She said that “you need someone who’s thinking about how we are going to survive. But more than survive – be a leader.” And, said Davis, remember – “life happens.”