BETTE R BUSI N ESS
June 2020
ACQUISITION PROCESS Tracey Underwood of PACE Solutions looks at the nuts and bolts of assimilating an existing practice into your own
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n recent years, there has been a significant amount of activity in firms acquiring other Financial Advisory practices. This is likely to continue as firms exit the industry either due to owner retirement or pressure from regulatory, professional indemnity and capital adequacy requirements. There have been a few articles recently which have focused on the due diligence side of acquisitions; this article focuses on the actual process itself when embedding the acquired firm into your practice. When looking at the acquisition process, of primary concern will be obtaining a return on your investment. In particular, if you have obtained finance to fund the acquisition then you will want to see a return as soon as possible. Therefore, you need to have a slick robust process in place to maximise your opportunities.
assets are held; location of clients. This analysis does not necessarily need to be conducted by the business owner and can be delegated to an experienced member of the support team. Combine the results to obtain:
• Total Funds Under Management
• Total number of Providers
• Locality of clients
• Which policies are receiving recurring income
If possible, obtain this information electronically from the exiting firm as this will greatly speed up the process.
1. DOES THE CLIENT BANK FIT MY PROPOSITION?
Once this analysis has been completed, this should show the number of clients that are not on ‘proposition’ and how easily they can be converted. If assets are held in legacy products with exit penalties and guarantees, this will make the conversion process more difficult and lengthen the return on investment. If there are a significant number of providers involved, then this will also lengthen the amount of time required to obtain accurate information.
This requires thorough investigation; are you focusing on the High Net Worth, Transactional Clients or both? If possible, take a snapshot of the soon to be acquired client bank; funds under management per client; where
From experience, collating policy information is particularly onerous with many providers not forthcoming with this information. This is likely to be the lengthiest part of the process and can take several weeks.
When thinking about a prospective purchase, start by mapping out how the acquisition will ‘fit’ into your business from a proposition and support perspective:
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