Tying the Knot: Growth by merger

By Kathleen Peace | November 19, 2010 | Last updated on November 19, 2010
2 min read

Meet for coffee, date, get hitched. The milestones of a successful personal relationship can also be applied to the merger of a business. As a lucky participant in a so-far successful merger of two financial planning practices, here’s what else I’ve learned:

  • Seek out a partner who’s about your age, or better yet, younger. You can accuse me of being ageist, but the fact is, younger people are more technologically savvy, and are generally less entrenched in their previous methods of business operations. This means there’s lots of wiggle room when defining how you all want your business to run.

  • Define your type. What do you want in a partner colleague or firm? MFDA or IIROC? Fee-for-service or commission-based? Stock picker, portfolio manager or comprehensive financial planner? Do you want to run the show or are you looking for someone else to wear the pants? How many working hours versus living hours do you want in a week?

    Know these things before you sit down to negotiate your partnership, otherwise you risk having the party on the other side of the table dictating these facets of your life.

  • Keep the first date breezy, and keep your cards close to your chest. Suggest going out for a coffee—no need for a big bad boardroom meeting just yet. Avoid disclosing your agenda when first meeting with a merger prospect, although this may not always be possible (some partnerships form organically after having known a person for some time).

    Why keep it light? Simple, a person’s not going to tell you he loves to churn accounts, ignore small clients, or underpay the staff at the firm meeting. It takes a couple of dates for the good stuff to come out.

  • Lay out a framework for dealing with future conflicts. Now is the time, when everything is sunshine and butterflies, to agree on how disagreements and uncomfortable situations will be dealt with in the future. Hammer out what you will and won’t put up with and if you get past that stage without a major struggle . . .

    Related Content

    The family office evolved

    Fundamentals helped firm flourish

    Building your business

    Succeeding your business

    Tying the Knot: Growth by merger

  • Meet the family. Get partners and kids in on assessing whether or not these are the people with whom you want to spend the rest of your working life. Take each other out for dinner, throw back a few pints and see what these folks are really about.

    Then, start preparing the work family for impending change and potentially new superiors. Inform them of your behind-the-scenes-pre-partnership work and let them know what you are doing is in everyone’s best interests. Stress that continuity of the practice is good for clients, for you, and by extension, for staff.

    Most importantly, keep your clients abreast of developments. Think of them as your in-laws who need to be comfortable with this union.

  • Get hitched. Have you agreed on a price? How expenses will be shared and profits split? Still like each other? Then it’s time to tie the knot. Get the new business cards made up, make office keys for everyone, and take the team out for a celebratory dinner.

    Once the honeymoon is over, the hard work begins. Even if you have an overwhelming workload, put your relationship with your partners high on the priority list. Continuously discuss expectations and prioritize together. Make time for fun with each other and never, ever go to bed angry.

  • Kathleen Peace, is a CFA, CFP, with Bennett March Inc., IPC Investment Corp.

    Kathleen Peace