M&A – how to go it alone.

Match. Negotiate. Complete.

Those three words sum up an M&A transaction and make it sound easy. In fact, some IFAs do think selling their business is easy, and the advent of the new Consumer Duty rules have brought forth a small flurry of IFAs who are convinced they can go it alone and make a business sale.

In reality, business sales and mergers are more like solving a Rubik’s cube, requiring skill, perspective, and perseverance. Often pitfalls are not immediately apparent until the sales process is well underway.

Of course, you can accept the first offer that comes along, and there are no shortage of “ out of the blue” offers circulating, but is it wise after all these years of building up your business to settle for what may not be the best offer, both in terms of the financial settlement and customer care.
It will come as no surprise that we recommend engaging an M&A specialist when buying or selling a financial services firm. If not us, there are plenty more that will be prepared to assist you.

 The main driver for going it alone is:

• Saving Money. In our experience going it alone does not save money.

However, for those who do want to go it alone, we’re also happy to share some advice. Our top four recommendations are:

1. Don’t stay local.

If you were selling your house, you wouldn’t limit demand to people who already live in your postcode.
The same principle applies to selling a business. Your personal contacts are a natural source of potential suitors, but this list will probably be skewed towards the city or region you work in.
Approaching strangers on LinkedIn won’t do the trick, but a good search of the financial press should throw up names of firms already active in the market.
While approaching bigger firms directly can be an option, it is always wise to proceed with caution.

2. Pay attention to culture.

Unlike the sale of a house, with your business you won’t just be agreeing a price and handing over the keys.
There is almost always some degree of working together in the months and years after the sale. It’s therefore important that both vendor and acquirer see their respective working cultures as a good fit.
When cultures clash, the chances of success drop dramatically.

3. Dig in for the long haul.

M&A deals are rarely straightforward and tend to be stressful.
Hope for the best, expect the worst, and assume completion will take a long time.

Remember this formula: happiness = reality minus expectations.

4. Keep your eye on the ball

Many firms get dangerously distracted by the demands of a merger or sale. Six or nine months of strategic drift can do real damage to an advisory firm, particularly at a time of rapid change in the industry.

In our experience, individual leaders should resolve to either keep running the business or to lead on the transaction – but not both. If all this sounds like too much hard work, then we can help.

As leading consultants acting for both buyers and sellers of advisory practices, we are well placed to help you find the right deal and – crucially – to see it through to completion. We chart a smooth course for our clients, allowing them to get on with what they do best.

To receive a copy of our guide to selling your IFA practice or to discuss your situation in confidence, please do get in touch.