In the life of an adviser, change is a constant.
Our profession is all about the process of supporting clients in their decision-making, in order to help them cope with the inevitable changes life throws at them.
Yet when it comes to making big business decisions of their own, firms can have a habit of not following their own advice.
A case in point would be the way many advisers and financial planners tackle the strategic decisions they need to make, such as a sale or change in corporate ownership.
My experience is it’s a bit like a countdown clock to midnight, where all the important decisions are left until the eleventh hour.
Another analogy might be the seven stages of grief - a cycle of particular stages an owner goes through from denial to reflection and acceptance that their business needs to adapt and evolve.
Having overseen and been involved in a number of change programmes and acquisition deals, here are some things I’ve learnt over time on waking up to the need for corporate change.
The early stages
Right up until you decide change is needed, it’s business as usual. The issue of what to do next with your firm has not yet arisen, or has not been given much more than a fleeting thought.
This is a perfectly normal and acceptable approach. Why worry about something not yet on your horizon? And yet…
For whatever reason, the penny will eventually drop that change is ultimately required. This might be triggered by a business need, or driven by personal reasons involving a partner or your family. It’s then that the countdown clock I mentioned earlier starts ticking in earnest.
You begin to ponder and reflect on what this change might look like, when it could happen and what it might mean for your future.
This period of reflection doesn’t usually equate to action being taken or decisions being made, but you’ll start to form a mental table of questions, perhaps with some assumed answers or solutions.
This is no bad place to start - at least you are now in the knowledge that something has to happen.
Self-reliance and intervention
Sometimes, there can be an assumption that as an experienced financial services professional, you are best placed to manage this change, whatever form it takes.
You find yourself thinking, how hard could it be? Why waste money on outside help from a third party who doesn’t know you or your business, and who is just hungry for their next deal?
All you need to do is use your connections, or phone that other local firm who is always looking to expand. Maybe a merger is the easiest option, or perhaps a staff buyout. What I tend to find happens in these kinds of situations is time passes, various meetings and discussions take place but all that seems to happen is you getting nowhere slowly.
With some reluctance, you may find yourself approaching one of those brokers or third parties. If they are worth their fee, they will listen carefully and try to understand you and your business, your intended outcome, your timeframe and other business objectives.
In the case of a merger or acquisition, those discovery sessions can often unearth a few issues to be resolved, but also little gems in the business that to the right party would be very attractive.
There will undoubtedly be work involved in getting the business into the best possible shape. It will likely involve months of hard work and laying the foundations, but in time a suitable sale, merger, buyout or other solution can be crafted with the appropriate partners.
Sealing the deal
Any deal is never quite as simple as originally envisaged. Your accountants and solicitors will do much of the heavy lifting, but still negotiations will ping back and forth, and more issues will be unearthed that need to be resolved.
There will be times when things get heated. Although it can be easier said than done, it’s worth trying to relax and remember this is just the way of things. If there is another party involved, if you both want the deal done it will happen eventually.
It’ll feel like the deal is never over, until finally it is. Final negotiations can take time, and in reality with earnouts, warrantees and covenants to contend with there will still be a lot of work to follow.
But in the end everyone should be satisfied, and ultimately the business will have evolved for the better.
However, it’s worth remembering we all have a tendency to leave these things to the last minute, assume that it’s easy and that we can do them ourselves. The professionals that have experience in these matters should be able to add value.