Three Keys For Advisory Firms Looking To Grow By Acquisition

Three Experienced Dynasty-Affiliated Firm Leaders Share Keys To Ensuring Successful Acquisitions
Michael Madden, Contributing Editor & Research Analyst, Wealth Solutions Report
Michael Madden, Contributing Editor & Research Analyst, Wealth Solutions Report

Acquisitions aren’t just for RIA aggregators and large enterprises – small and mid-sized advisory businesses often choose to grow inorganically. While the scaled, repeat players have teams of experts with years of experience and playbooks for multiple strategies, less experienced firms may encounter difficulty evaluating an acquisition opportunity and, once they decide to enter the arena, knowing how to make one proceed smoothly.

To learn the keys to successful acquisitions for advisory business leaders, we reached out to Dynasty Financial Partners affiliates who lead advisory firms and have successfully completed acquisitions: Mike Quin, Partner and CEO, DayMark Wealth Partners; Phil Fiore, Jr., CEO, Executive Managing Director and Founding Partner, Procyon Partners; and Ronald E. Thacker, Managing Partner and President, Americana Partners.

We asked each of them: For advisory business leaders looking to acquire another firm, what are three important issues that may appear small but can make a large difference in a successful acquisition?

Their responses follow.

Mike Quin, Partner And CEO, DayMark Wealth Partners

Mike Quin, Partner & CEO, DayMark Wealth Partners
Mike Quin, Partner & CEO, DayMark Wealth Partners

Three seemingly minor issues can make or break an acquisition for both the buyer and seller:

Cultural fit and philosophy: Financials often take precedence, but cultural compatibility is where I spend most of my time early in the M&A process. A misalignment in cultural values can lead to failure. Understanding culture will give insight into clients at the target firm. I often put the seller in social situations to observe behavior. An easy way to start this process is to watch how they interact with staff at a restaurant. If they are courteous to people they don’t know, who are there to serve them a meal, chances are that attitude will carry over into their organization. People matter.

Talent retention: The real assets of businesses in our space ride up and down the elevators every day. Recognizing and retaining key employees, especially as they relate to the overall goal of the acquisition (growing the business or succession are good examples) is another issue that makes a huge difference in a successful acquisition. People matter.

Transition planning: Often the actual transition is discussed but not planned to capture every detail. A quick, efficient transition is an opportunity to show clients what is in it for them. Our partners at Dynasty execute this, in concert with DayMark, at a high level. This client experience should blow away expectations. Details matter.

In the RIA arena of acquisitions, attention to these perceived minor issues can help position your firm for outsized growth and success.

Phil Fiore, Jr., CEO, Executive Managing Director And Founding Partner, Procyon Partners

Phil Fiore, Jr., CEO, Executive Managing Director & Founding Partner, Procyon Partners
Phil Fiore, Jr., CEO, Executive Managing Director & Founding Partner, Procyon Partners

For leaders in the advisory business considering acquiring another firm, three seemingly minor factors can significantly impact the success of the acquisition.

The alignment of culture stands paramount. An advisor from a lifestyle-oriented practice may struggle to integrate into a dynamic, high-octane environment like ours, for example. Embracing the firm’s mission is crucial – it may not resonate with everyone. Advisors skeptical of firm values might find themselves out of sync.

Business compatibility is another critical factor. An RIA focused on high net worth families but employing a starkly different business approach, such as trading stocks versus offering comprehensive planning and advisory services, could jeopardize a potentially fruitful partnership. Despite attractive initial figures and public relations benefits, a discordant business model can lead to long-term challenges.

Lastly, the transition should be mutually beneficial. An acquisition that favors only one party, failing to create shared value, is likely unsustainable. Our policy is to avoid engagements with advisors whose primary motive is the immediate financial gain rather than a long-term partnership. This approach isn’t about financial competitiveness but about fostering a community built on mutual respect, growth and shared success.

Ronald E. Thacker, Managing Partner And President, Americana Partners

Ronald E. Thacker, Managing Partner & President, Americana Partners
Ronald E. Thacker, Managing Partner & President, Americana Partners

In any M&A transaction there are literally hundreds if not thousands of details to work through and consider, and some are clearly more critical than others.

When it comes to the success of an M&A opportunity, company culture is the top issue that makes or breaks the success of the deal. The parties involved in the deal may think they are not overlooking it, but its importance is often underestimated.

Everyone has an ego and that drives success in many situations, but individual egos can’t be so overbearing that it disrupts the harmony and cooperation within the existing firm. Not only do the business models of the firms joining need to line up but the personalities and egos involved also need to gel.

Also, the client must always be first and foremost, as a top priority. Growing a successful bottom line is clearly a mandate, but clients must never be made to feel that the firm’s interests come before their interests, and this ties back to the culture of the people in the firm that we are acquiring. All parties must have a “serve the client first”  attitude instead of a “make money for myself” attitude.

If the culture and people factors are positive and in alignment, all the details seem to fall into place without too many problems. If the culture and people factors are not positive, every detail feels like a hill to die on, and that’s when you know it’s time to cut bait and work on the next deal.

Michael Madden, Contributing Editor and Research Analyst at Wealth Solutions Report, can be reached at mmadden@wealthsolutionsreport.com.

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