Forget the searching, deal-making and due diligence, says Mark Stokes, the integration of your firm into the new entity is typically the most labour-intensive part of the whole acquisition process
So you have met the right partner, struck a good deal and made it through the due diligence process - surely that is the acquisition process more or less over, right?
Far from it. Integrating your firm into the new entity is typically the most labour-intensive part of the process - and it is also the time when the business owner needs to be most keenly attuned to the emotional needs of staff.
A good acquiring firm should have a defined process for integrating the firm over a specified time. But it is a myth that the acquiring firm will be responsible for the integration.
In reality, the firm being bought will do 90% of the integration work, which will extend across the pre- and post-acquisition periods - up to and beyond the time when you cease to operate within your own regulated entity and become part of the larger organisation.
Within a short space of time you, your staff and your clients will experience a number of changes. Stationery, the name above the door, new template letters and the look and feel of the office will all change very quickly.
Once the transaction has taken place, you will need to ensure the novation of income is dealt with swiftly and efficiently, so your agency and initial and ongoing adviser charges are passed successfully to the agencies of the firm acquiring you. You will also move to a new accounting process, with different systems for the reconciliation of initial and ongoing charges, and a different staff expenses policy.
Dealing with new hardware and software is generally not problematic but be aware that migration of data is at best 75% effective and the reality is you will have to tidy up data both pre-and post transfer.
Of key importance is communicating the change to your most valuable asset - your clients. But also crucial is making sure your staff have a good reason to buy into the integration process. That means letting them know what the change means for them as soon as you possibly can.
So, secure the goodwill of key staff by ensuring they are being rewarded for their part in the process and can see a clear career development path ahead of them. This is made easier if the acquiring firm has a share scheme and/or bonus scheme available to all staff.
It also helps if the deal is seen as a merger of activities rather than a takeover or invasion of the seller's sovereign soil - maintaining the goodwill of staff at all levels can make or break an integration programme.
A good buyer will want the management team to remain in place - after all, who better to run the business than the management team responsible for building the firm that stood up so well to the diligence process?
But staff at all levels can be key to making your business operate efficiently - not only do you want to keep them, you also want them to help take the pain out of the integration process. The most efficient approach to integration, then, is to appoint champions.
Do this from within your business to different parts of the process as early as possible, leaving your best business-writers to do what they are good at. As an example, you may want to put your practice manager in charge of admin, your platform expert onto platform integration and your finance director on novation of income and accounting integration.
Human resources issues must also be handled with sensitivity - for one thing, contracts of employment and benefits offered by the acquiring firm may be considerably different - so be open and honest about what is being signed up to and make sure the new deal does not short-change your employees.
Perhaps most importantly of all for business owners, though, is how they themselves respond to being integrated into a larger entity. Integration requires a genuine sense of letting go and acceptance of the new.
For senior management, that means not trying to hang on to the old name as a trading style for a couple of years, or attempting to carry on running your business your own way. The main reason for the deal is to improve the business. Embrace these changes - they are symbolic of embracing the entirety of the integration process.
Mark Stokes is managing director of Lewis Chambers "powered by Succession"
The chairman isn’t answering his email
Reforms not enough
An economic cocktail
To encourage consumers to shop around
Will report to Pat Shea