Wealth management firms, big or small, are being bought at a rapid pace. A 10-year bull market has pumped up their values, and bigger wealth management companies and private equity firms are looking to acquire those that have a steady, predictable cash flow from fees.


This is a great opportunity for the advisers who have ownership stakes in the acquired firms. They receive a large payment from the buyer, usually some multiple of the annual fees they generate, and they get a succession plan since someone else will be there to take over when they retire. But, what about the client?


The problem is the uncertainty from the client perspective and what the acquisition may mean to them. The reaction from clients runs the full spectrum, everything from support and enthusiasm to concern about how the change will impact them directly. In some cases, there are many positive influences for the clients as a result of a merger: they are gaining resources that separately two firms are not able to provide.


Helping independent advisers means advisers can do more for the clients. Independent advisers often find that they are slogging through tedious paperwork, risk management, compliance with federal rules, regulatory hassles, operational burdens, human resources and other back-office functions that sully the joy of their work. While hiring more internal staff is a solution, this often leads to the adviser becoming the default manager, with even more administrative details to address. Mergers, however, can allow the adviser to enter a business where management and back-office operations are handled by someone else, and let them focus on work that generates real value to their clients. The advisor is also able to free up more time to spend with clients or to get access to a platform or technology that the firm could not otherwise have afforded. Both of these outcomes could benefit clients.


In addition to the aforementioned advantages, if your adviser is successful and of a younger age, he/she may find good mentors from the merger. The merger of a junior adviser with a successful and more experienced adviser can bring opportunities for growth as well as a flourishing mentor-mentee relationship. In situations where a natural mentor doesn’t exist for a junior adviser, he or she may benefit greatly from accessing the experience and wisdom of a senior adviser through a merger. As a result, this will enhance the quality of service delivered to the clients. The senior adviser, in turn, will find not only a successor, but someone who can carry on his or her legacy — and perhaps even introduce valuable new methods and fresh ideas, which in the long run, will also add benefit to the clients.


So, when a merger takes place, everyone can win, including the clients!


The e-Merge Program from Succession Link is a customized matching service for those interested in Merging or being Acquired. The program provides concierge support through the entire M&A process, providing you with matches and introductions so you can find the ideal long-term relationship and gain success.

Check out https://connect.successionlink.com/emerge-b and learn more about working with us on your M&A agenda.

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