Merging? 5 Tips to Avoid Pitfalls
In June 2012, Glenn Kautt, a Financial Planning columnist and vice chairman of Savant Capital Management, based in Rockford, Ill., experienced a merger firsthand. His old firm, the Monitor Group, based in McLean, Va., combined with Savant Capital Management. Since then, he says many people have asked him, “How’s it going?"
His answer: Most of the integration has gone as expected, but there have been some surprises. Read Kautt’s latest column in Financial Planning’s September issue to learn more.
Robert Glovsky, a financial advisor at the Colony Group, based in Boston, has experienced similar challenges. He merged his prior firm, Mintz Levin Financial Advisors, with the Colony Group on July 1, 2012, and has overseen the integration process over the past 14 months.
Here is advice from both Kautt and Glovsky on how other advisors can minimize (or eliminate) bumps along the road when it comes to merging advisory companies.
Related article: Important Lessons From the Monitor-Savant Capital Merger
-Create a culture of change. Read John Kotter's book: Leading Change
-Look for individuals who resist change. Help them change their attitude
-Continue to work on attitudes for at least two years after the merger
-Develop a credible communication strategy for the merger, before, during and after the event
-Staff will be nervous. Communicate often to reduce or eliminate worry and rumors. You can’t over communicate!
-Discuss upcoming changes often, and get feedback from everyone
-Have an integration plan in place before the merger. Make sure to include people from both firms and be patient. Deadlines are good, but not critical if the work is progressing in a positive direction
-Develop your combined one, two and three-year goals now, not later
-Keep everyone looking to where you want to end up, not where you are
-Create an organization that supports your business goals
-Communicate the coming organization structure to everyone
-Create excitement and involve everyone in the coming growth. Make change fun, not scary
-This is a one-time event. Use accounting, tax and legal professionals
-Hire a consultant who does mergers and acquisitions for a living. He or she will save you time and money
-Check your goals against what the pros tell you. If they tell you your goals won't work, they probably won't. Consider modifying them, or shutting the deal down