If the intelligence gained from a number of recent conferences I have been at are anything to go by then we look set for an active period of M&A.
There seems to be genuine interest from institutions, asset and fund management groups securing further funds from the wealth management sector and also building their distribution channels as well; not simply a reaction to regulatory reforms such as RDR, or concerns over the myriad of new regulations such as Mifid II coming down the track.
We have seen very good transactions over the recent past that have integrated well, delivering added value to clients as well as to the bottom line. Successful mergers are where the acquirer fully understands what they are getting in terms of people, clients, third parties and revenue streams.
They dig deep in to the profit centres in order to understand what is creating profitability and establishing the extent of any “baggage” that all firms have in some shape or form. We have seen a number of enlightened buyers conclude that certain “profit areas” bring with them more excess risk than they are prepared to accept or little in the way of real customer value and either change the business model or cease it altogether.
With any merger or acquisition it is easy to forget about how important communication is, getting the transition right and accepting it may take some time for everyone to feel embedded. With this industry being so people orientated a poorly managed and communicated merger may see clients never fully seeing the combined benefit.
This leads to disenchantment across all stakeholders and it is no surprise when original founders of the vendor leave and the original business starts to disintegrate or is sold on again at a considerable loss.
Simon Collins is managing director of RGP