It’s hard to believe that it’s been 5 years since we launched RIA Match.  Our last blog focused on the importance of ‘Being Curious’ – a key trait we found among our most active and successful subscribers. In this blog, we focus on our own curiosity themes that we’ve seen between the buyer and seller relationship over the past 5 years and some key takeaways:   

Takeaway # 1: Inorganic Growth is a Challenge.  Advisors by nature are alpha dogs and regardless of age, AUM or value proposition, most advisors think of themselves and present themselves as buyers. Growth mode can be discouraging. Do not be deterred by what an advisor claims are his stated goals. The advisor’s age and current succession plan are more indicative of his future needs. A buyer will become a seller if they see a reasonable path forward for themselves and their clients. Advice to buyers; be reasonable, know and communicate your value proposition.

Takeaway # 2: Those Who Envision a Broader Goal are More Successful. Instead of engaging in dialogue focused on your own acquisition vision or sale price, reset your approach. As simple as it sounds, when you first engage with a potential partner, determine if you like each other, if you can work together and if you value the same things. Yes, it is important to share a similar investment philosophy, client experience, and valuation assumptions, but if you can’t develop a relationship based on trust and a healthy working exchange, it won’t go well, regardless of how well aligned the rest of the deal terms.

Takeaway # 3: Your Definition of Success Defines its Probability. If your vision is fixed and it’s your way or the highway, your negotiations will be ineffective. If you are a seller and you are rigid on a valuation or business model with no room for discussion, then you may be yielding to maturity without a liquidity event and more importantly, your clients will be left in a lurch when you can no longer care for them. A buyer who is determined to win every negotiating point decreases their chances of closing a deal they worked hard to develop.  

Takeaway # 4: The Art of Compromise. Both sides must have a winning outcome. If the seller perceives they are getting the bare minimum value and is concerned for their client’s after they’re gone, they will consider bailing, even after months of discussions and deal making. If the buyer feels as though they have met every concession and the seller is still sore, they may likely walk away as it is only the beginning of the relationship for them.  

Takeaway # 5: Synergy is Required to Cross the Finish Line. The deal terms matter but if your clients don’t see the value and make the switch, the seller’s earn out is compromised and the buyer retains less of the AUM pie. With a joint vision and mutual respect, the buyer and the seller must communicate the increased value of the joint firms to all stakeholders; that means both your clients and staff.

Bonus Takeaway: Know Thyself RIA Match subscribers that take the time necessary for true self-discovery, looking hard at where they may have gaps, and then determine their ideal business vision, are the most effective on the platform.  Need help in this process? Contact us for our Concierge Consulting Services and be sure to check out the additional resources in our website’s Knowledge and Insight Digest, Store, and Support sections.  

All the best,

Mary Ann Buchanan

Founder and CEO, RIA Match