PLANADVISER - September/October 2017 - 10

practice development
Deciding
To Team Up
In spite of doubts or
questions, sometimes
only an 'M' or 'A' will do
IT MAY start as a nudge of discontentment,
a sense your firm could be something
more. But at some point, you find
yourself thinking about it constantly:
joining forces with another firm to
make your business grow.
According to Rick Shoff,
managing director of the
adviser group at CAPTRUST,
in Doylestown, Pennsylvania,
persistent thoughts like those
could mean it's time to get intentional.
And Shoff should know, having
merged his own firm with CAPTRUST
in 2006 and taken part in 25 acquisitions
since-the latest being Tampabased
Captrust, which split from the
larger firm in 1998.
When mulling how to grow his
firm, Shoff knew just affiliating would
not be enough. " I wanted to find somebody
likeminded to go all in with, and
then we could go about building something
special. "
That was his " catalyst, " he says,
and all advisers looking to team up
should have one. Typical catalysts
include wanting to increase the firm's
capacity to grow, to improve its client
value proposition and revenue, and to
enhance opportunities for employees.
Those, plus the realization that " for
that next level of growth, they could
get there quicker and more effectively
by merging or being acquired, " he says.
Catalysts also must be strong
and " undeniable, " as the acquisition
process is intense; a seller should seriously
assess his goals and motivations
before any contract signing occurs.
To that end, Shoff stresses the need
for preparation-the more that is done
upfront, the better the chance a transaction
can occur. CAPTRUST likes a
The more
preparation done
upfront, the better
the chance
a transaction
can occur.
" mutual assessment " approach, " where
it doesn't feel like there's a buyer and
a seller, but rather two buyers, " Shoff
says. Parties should discuss topics
such as culture, value propositions and
business model, to look for synergy.
But even when all the facts line up,
a deal may still falter. " These intellectual
conversations-'Will the value of
my firm grow more with you vs. on my
own?' ... always end with an emotional
decision, " Shoff points out. In fact, in
pretty much all of CAPTRUST's acquisitions,
the same pattern occurs. " It's like
you're sprinting toward the finish line,
then a bungee cord around your waist
snaps you back, " he says. Just short
of signing, the seller delays, maybe
waiting six months to revisit the deal.
The status quo is to blame, says
Shoff; the owner does not need to sell.
" Everybody's had a great business; they
didn't necessarily have to do anything.
If they're not ready for that moment, it's
easy just to kick the can. "
So warning them early on is key.
" I'll say: 'After we get through the due
diligence and you check every box,
there's one box you can't check. It's the
emotional part of giving up your baby,
of having been your own boss, and now
you'll have multiple partners' ... so
when they get to that moment, they're
better equipped to work through it.' "
To help, the selling firm can ask
itself feelings-based questions such as:
What makes you most proud of your
business now? What would you do if
money weren't an issue? And, what
gives you the most pause when you
consider merging with the other firm?
Then tell the buyer your answers, Shoff
says. That way, it can point out where
your concerns are universal, something
a first-time seller might not know.
Mutual vulnerability is even better,
he says, as it builds the relationship.
And relationship is the basis for any
such deal. -Karen Wittwer
10 | planadviser.com september-october 2017
Art by Yinfan Huang
http://www.planadviser.com
PLANADVISER - September/October 2017

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