A larger market share, better overall revenue, and a larger presence all help businesses grow and are some of the many benefits to merging financial advisory firms. However, there are a few things you should avoid in order to make sure your merger is successful.
#1 – Failing to Find the Right “Fit”
Many advisors make the mistake of assuming that when two companies merge into one, things will just be business as usual. This is not the case. A merger should make for better business through a series of positive changes and adequate succession planning, which takes a lot of effort on everyone’s part. If you have serious doubts about whether your company can fit with another on a philosophical or cultural level, walk away.
#2 – Lack of Fundamental Communication
Mergers can stir up a lot of negative emotions amongst existing employees. Will they still have jobs? Will the merger hinder their personal development? Is there still a shot at that promotion? It is absolutely crucial that those in leadership positions communicate with employees at all levels before, during, and after the merger. What’s more, rather than simply lecturing employees on upcoming changes, make sure that you ask for their feedback.
#3 – Failing to Integrate a Project Plan
Developing a plan to merge the two advisory firms together as painlessly as possible, all while keeping the vision for the future in mind, is imperative to your overall success. You need to develop both long- and short-term goals now rather than focusing solely on the present, and you need to create a succession plan so that you can identify which people are capable of assuming important roles.
#4 – Making Growth Seem Scary
A merger, more often than not, results in a brand new organization. This makes growth seem terrifying not only to junior advisors and assistants, but also to some of the individuals in management positions. Throughout the entire merger process, it is important to keep everyone positive, motivated, and excited for the future. Although change is inevitable, this change is a good thing for the new practice and everyone in it.
#5 – Failing to Get Help When You Need It
Most financial advisors only merge with other companies once in their lifetimes, and professional help certainly exists. You will likely find yourself surprised at how much time is involved, and many of the procedures are incredibly complex – particularly when it comes to the legal aspects of things. Hire a good lawyer to oversee the merger, and make sure that you hire a solid tax professional to help you mitigate any potential tax risks and liabilities along the way. Doing so may cost you a little more in the short term, but in the grand scheme of things, it is a very wise decision.
Merging your practice does not have to take all of your time or cause you huge amounts of stress. Oftentimes, making sure that you find the right fit, maintaining an open line of communication, and integrating a plan for both now and in the future is all that is needed to successfully complete a merger and increase your overall revenue.