Keys To Ensure A Cultural Fit With A Prospective Buyer

Experts From Summit, Alaris And Modern Wealth Each Provide Three Keys To Ensuring Cultural Alignment Post-Transaction
Stan Gregor, CEO, Summit Financial; Jacqueline Martinez, Managing Partner, Alaris Acquisitions; Jason Gordo, President And Co-Founder, Modern Wealth Management
Stan Gregor, CEO, Summit Financial; Jacqueline Martinez, Managing Partner, Alaris Acquisitions; Jason Gordo, President And Co-Founder, Modern Wealth Management

After the dust settles on a deal, the ensuing months and years will prove whether the seller got it right on various elements of the transaction, both objective and subjective. Few items are more important – yet more subjective – than cultural alignment. Cultural fit is frequently stated as a very important consideration for sellers of RIAs and advisory businesses, but constructing an approach to discern a good fit in advance of the transaction remains difficult.

To understand practical steps sellers can take to test cultural alignment with prospective buyers, we spoke with Stan Gregor, CEO of Summit Financial; Jacqueline Martinez, Managing Partner at Alaris Acquisitions; and Jason Gordo, President and Co-Founder of Modern Wealth Management.

We asked each of them: The chances of post-deal success increase if participants take advantage of opportunities to ensure cultural alignment between buyers and sellers. What are three ways sellers can ensure prospective buyers are a match when it comes to cultural fit?

Their responses follow.

Jason Gordo, President And Co-Founder, Modern Wealth Management

Jason Gordo, Co-Founder and President of Modern Wealth
Jason Gordo, Co-Founder and President of Modern Wealth

“Cultural fit” is the cornerstone of any successful transaction. Communication style, work ethic, leadership philosophy and organizational values all have to align in a new partnership. Both sellers and buyers must spend time and effort assessing cultural compatibility – it’s non-negotiable. Below are a few strategies to understand your new firm’s current culture:

Embrace open communication. Being transparent during the discovery phase is critical. Sellers and buyers alike should openly communicate their organizational culture, values and business principles. This not only builds trust, but also establishes a shared understanding of cultural expectations that allows the firm to help facilitate alignment or possibly uncover a cultural mismatch.

Engage with future team members. Meeting with the team you’ll closely work with post-transaction helps you uncover their personal work style and culture. Conversations and active listening help sellers assess compatibility with their own team’s culture.

Interview current partners. Conducting interviews with existing partners is a great way to evaluate cultural fit. By understanding the current culture of potential partner firms, sellers uncover their values, communication norms and operational methods. Asking questions like, “What has been your most exciting and challenging experience since joining the firm?” can help provide insights into the real culture of the firm you’re considering.

Using these methods, sellers increase their prospects by establishing a mutually beneficial partnership with a culturally aligned buyer.

Jacqueline Martinez, Managing Partner, Alaris Acquisitions

Jacqueline Martinez, Managing Partner, Alaris Acquisitions
Jacqueline Martinez, Managing Partner, Alaris Acquisitions

“Cultural fit” is an elusive and subjective concept, yet buyers and sellers cite it as the main ingredient of successful partnerships. Although it cannot be measured definitively, sellers can identify culturally aligned buyers by assessing objective data such as structural similarities,  autonomy profiles and partnership preferences.

Structural points of alignment make it easy to identify business similarities or differences such as fee models, acquisition models and client value propositions. For instance, if a seller is a hybrid firm, yet the buyer is fee-only, this would be a structural mismatch.

The autonomy profile reflects the seller’s decision-making needs. Sellers must assess which aspects of decision-making they are prepared to divest and determine if these align with the buyer’s mandatory points of alignment. If you want to retain investment management control, yet the buyer requires you to divest all portfolio decisions, this would be a potential problem.

A seller’s partnership preferences are items they are seeking in a partner – access to growth channels, expanded services or technological advancements. If you want a partner who can get you into the custodial referral programs, yet they aren’t in them, that may point you in a different direction.

By leveraging these objective criteria, sellers can get closer to a partner who could be a great cultural fit. Alignment on these objective criteria identifies the buyers you should invest the time to see if your subjective experience is also a match. Sellers improve their odds of successfully finding a cultural match by pinpointing these three objective categories.

Stan Gregor, CEO, Summit Financial

Stan Gregor, CEO, Summit Financial
Stan Gregor, CEO, Summit Financial

With record levels of cash and equity being offered by firms amid intensifying competition, it can be easy to lose sight of the most critical component of the transaction: what happens when the check clears.

Often, the goal of the selling firm is growth and achieving that objective can be easier if there is a cultural alignment between the buyer and seller. The approach below can help establish a strong rapport:

In due diligence make sure to ask the right questions. It is essential that the buyer and seller understand each other’s vision for the future. Is one entity looking to grow organically versus inorganically? How will that be achieved and what support does the seller expect from the buyer? Will the seller be foregoing its tools (e.g., trading, CRM) or maintain its existing technologies? How will decisions be made?

While it is the CEO or lead advisor who is selling, the other team members will be interacting with the buyer’s team on an ongoing basis. All members of both firms should get to know one another.

Visit each other’s offices. It is imperative to observe how the buyer interacts with the seller’s staff to gain a deeper understanding of how they will be supported. An office visit can also provide visibility into how each firm operates. Lastly, both sides can receive feedback on the interactions their staff had with the other team members.

James Miller, Contributing Editor and Research Analyst at Wealth Solutions Report, can be reached at

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