M and A

How Not To Blow It: After A Deal Closes

Andrew Marsh May 23, 2024

How Not To Blow It: After A Deal Closes

When a merger and acquisition deal is concluded, this is just the start of a series of challenges for the new entity. Someone with experience of living through these deals comments on lessons learned, and provides advice for RIAs and other wealth management businesses.

The following article comes from Andrew Marsh, who is vice chairman of US-based wealth management group, Dynasty Financial Partners (headquartered in St Petersburg, Florida). Dynasty, which has a network of wealth management businesses, also advises these businesses on their own corporate strategy, including M&A. 

In an article published here, Harris Baltch, head of Dynasty’s Investment Bank, gave his views on the most efficient and effective processes for achieving the best outcomes in RIA M&A. Marsh builds on Baltch’s analysis, and described his colleague's perspective as “unique.”

The editors of this news service are pleased to share this article and its contribution to debate. Remember, that this news service is a platform on which you are invited to contribute, discuss and respond. The usual disclaimers apply to views of outside contributors. To jump into the conversation, email tom.burroughes@wealthbriefing.com.

The closing of a deal is just the beginning and, in my experience, building the bridge to a well-merged and integrated company is just as complicated and emotional a process. So, in the spirit of Harris’ approach, I offer my thoughts and recommendations for how to do post-close right – how NOT to blow it. 

A critical determinant of post-close success is leadership, and key hallmarks include: 

Sensitivity and respect
An effective leader must master the art of balancing sensitivity and respect for the acquired company’s past with the call to embrace the changes occurring and move forward with the future of the new company. Show thoughtlessness about things fundamentally important to the acquired firm and you risk alienating your new colleagues – and you could blow it. 

For example, I spent the first 90 days after Richardson Wealth’s acquisition of Macquarie on the road listening to employees talk about their experiences with their former employer and what their hopes and fears were with the new organization.

My approach was: “Seek to understand and then seek to be understood.” If anything needed to be rectified and/or addressed as we integrated the new organization, this time provided the opportunity to build new relationships and build trust with people to do that.

There is pride built up in the company that is acquired and, as a leader, it is imperative to make sure that you do not move too fast with change and disregard what a lot of people might value greatly in the firm that has been sold. Keep in mind that the acquirees have put their blood, sweat, and tears into their life’s work. Acknowledging that is an important first step toward encouraging people to unite in your shared future. 

Clear, decisive, objective action
Who is the leader? This must be clear from the start so that this person has the mandate and the authority to start making decisions and build the newly-merged company – or you could blow it.

As Harris wrote, leaders need to be omnipresent throughout a deal, patient, purposeful, and visible, communicating regularly on multiple channels. This requires discipline, as well as the courage to view the post-deal landscape objectively to make any changes necessary for future success.

For example, it is one thing to assess talent for a company with $6 billion in assets, and quite another when an acquisition vaults you to $15 billion. Do you have people in place who are experienced and capable enough to step up to the complexity of the new organization? Or do you need to reexamine your current capabilities through a new lens? Failing to objectively evaluate your current resources in light of future needs could lead to ineffective follow-through on your integration plan – and you could blow it.

Following the acquisition of Macquarie, we had a chief compliance officer from both firms; however, as strong as they each were in their original environments, I realized that neither were ideally positioned to manage the risk of the new organization. I had to make the difficult decision to hire someone different for the role. As a team, we had to remain objective about where our new company was going, rather than where it had been. As I often say, “what got us here may not get us there.”

In addition to staffing, two other main areas of potential synergy to consider post-close include real estate and third-party contracts. As an example, we were able to benefit from our new scale and renegotiate many of our contracts following our acquisition of Macquarie, and even cancel some that were no longer relevant or no longer served the new vision of our expanded organization.

Change management
Change can be hard, especially during the complicated, emotional integration process. For this reason, it is important to identify opportunities where the combination of the firms is a win for everyone – or you could blow it. 

As a leader, identify who your champions are, the early adopters, who the fence sitters are, and those employees who might be the most resistant to change. Articulate the vision for what's on the other side of change with each of these audience’s concerns in mind so that the newly-merged employees begin to unite as colleagues and recognize that it's not change for change's sake. Build excitement about the potential and the benefits possible once you do the work together. 

Culture building 
It is a lot easier to manage the culture of a firm one hire at a time. However, when you suddenly grow by, say, 200 people, you need to create opportunities for your employees to collectively get to know each other and embrace a new common culture – or you could blow it.

In my experience, I found it helpful to communicate the foundational elements of our (the acquiring firm’s) story and how the history, values, and folklore of both companies complemented each other. Following our acquisition of Macquarie, we were fortunate to have members of the Richardson family, a key shareholder, speak to our newly-merged employees about how their original private family business was incorporated before Canada was even founded, and tell stories about how the company and the family grew over the years, what businesses they developed, and how they were able to maintain their mission and values over seven generations. My situation was quite unusual given Richardson’s history; however, regardless of the company and its heritage, any effort to invite new employees to participate in the development of a culture for a newly-merged company speaks volumes. 

Remember – in the midst of everything – don’t forget your clients
As excited as a leadership team is to successfully complete an acquisition, you must continue to look after existing clients – or you could blow it.

If clients start to feel as if leadership is dropping the ball and neglecting their service and needs, then there is a serious misalignment in what you are celebrating. For many reasons, Richardson’s acquisition of Macquarie was challenging and often chaotic from an operational perspective, so I made the decision to be upfront with our advisor teams. I explained that “combining our two businesses might be messy at times and there may be moments where our ability to help you help your clients will be tested.” I candidly explained that “there will likely be a bumpy period over the next three to six months, but here is where we're going, and here is why we're doing this.”

I cannot emphasize enough how far managing expectations and making sure that ALL of your stakeholders are considered, especially existing clients, matters to the ultimate success (or failure) of a deal.

Negative surprises? They're just curveballs
Listen carefully to your advisors and other experts that you have gathered to coach you through the deal – or you could blow it.

When pitched a curveball (and trust me, you will be), I suggest gathering everyone who could offer perspective – from both companies – around the table to hash out a way forward. Especially during the sensitive time integrating systems, processes, and people, you never know if there might be a back story that would help you better understand how to solve the issue.

Leadership during the post-close, integration period is about making strategic decisions that often are difficult and uncomfortable, but necessary to avoid being stuck in the past. Emotions are high, and leaders need to set the tone with professionalism, objectivity, and respect.

About the author
Andrew Marsh’s career in the wealth management industry spans over thirty years. He was founder and leader as president and CEO of Richardson Wealth (formerly GMP Private Client and Richardson GMP) from 2004 until he retired from the firm in 2021. 

Under his leadership, Richardson Wealth became a major independent wealth firm in Canada and expanded to more than 160 teams, managing more than $30 billion before going public in 2020.

Register for FamilyWealthReport today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes