Whether you are buying or selling a financial advisory practice, the whole transaction can feel a lot like dating. You’re looking for someone who is willing to see the process through and who is ultimately a good fit for your practice. But a good fit is about more than just agreeing on a price. Fit is also determined by four key factors: Organizational Culture, B/D platform, Investment Approach, and Client Composition.

Organizational Culture

Organizations, like people, have their own set of values and form their own personalities and behaviors that reflect those values. And just like people, conflict arises when organizations with different values try to merge. That conflict can cause good staff and clients to leave, which significantly impacts the quality of the business and undermines the whole purpose of the acquisition. Both the buyer and seller should communicate their organizational values and culture and determine whether they are in sync before considering an acquisition.

B/D Platform

Not only is a smooth cultural transition important, but also a smooth operational transition too. It’s much easier to merge practices that are operating on the same B/D platform, with the same policies, forms, systems, and processes. Not only does it allow the quick onboarding of staff and data, it also reduces changes and headaches for clients, which reduces attrition rates and preserves the value of the business post-sale.

Investment Approach

Just as companies make decisions about culture, practice leaders also make critical decisions about their investment approach including portfolio management style and the products they wish to offer. In some instances, an acquisition can give a practice leader an opportunity to expand into new markets and products, but generally its best to stick to what you do best and grow using the proven approach that has made you successful so far.

Client Composition

Many sound business leaders quickly learn that a profitable and scalable strategy relies on focusing on a target niche of clients. Whether its female entrepreneurs, airline pilots, or doctors, its best to stick with the market you know well and can continue to serve then to stray too far from your core audience. Finding a business that is already serving your market, or a natural adjacent, such as having doctors as a core niche and then adding nurses, ensures a strong foundation for the merger and for the success of the business moving forward.