The amount of merger and acquisition activity going on in the independent advisory industry is more than I can ever remember. The reason behind it seems to be several major industry changes occurring at the same time.
The driving forces behind this “perfect storm” seem to be the tail end of the baby boom generation of firm owners reaching retirement (or scaling back) age, combined with the industry-wide trend toward growing larger businesses.
Each of these forces can contain various motivations by buyers and sellers that can undermine the success of M&As. This is why I strongly recommend that before you enter into a merger or acquisition, you get very clear picture about why you want to do the deal — and why the other party wants to do it, too.
Firm owners may have many reasons why they want to sell or merge their firms: from simply wanting to retire; to the fact that their business has gotten too large for them to manage; to simply wanting to be part of a bigger community of people; to the realization that that their clients would be better served by a larger firm.
Buyers also have their own set of motivations, including: the desire to grow quickly, a need for experienced advisors, or a proven rainmaker; quickly increasing the value of their business; to get into a new market; or simply wanting to extend their service model to more clients.
And it’s because these goals can vary so widely, that it’s so difficult to make sure both the buying owner and the selling owner are on the same page; complementing, rather than undermining, each other.