Mergers, on the face of it, are a great way to scale up and position the newly formed firm as larger. Finding another firm, getting ‘married’ to them and becoming one entity, often sharing resources and overheads, reducing costs, tapping in to the skills of other partners, seems like such a great idea.
I find, in too many cases that no one is really happy with their decision to merge following the ‘honeymoon period’.
Often, the result is that each partner becomes a silo organisation within the umbrella of the practice. They often have their own team, they’re protective over their own client base, they have their own pricing mechanism and there’s little if any consistency across the partnership.
High level decisions are seldom made quickly if at all, committee style discussions take place that go around in circles.
The causes…
- 1. Mergers have taken place for the wrong reasons, a marriage of convenience as it were rather than because of mutual values and aspirations. When the partners/directors of a business don’t subscribe to a common vision and objectives they each have their own agenda, often not shared with others.
- 2. No individual leader has been nominated who will make the final decisions that others will follow, even if they were against the decision in the first place.
I don’t state this based on limited experience. I’ve worked with thousands of Accountancy firms spanning 3 decades, I’ve seen this happen time and time again. I’ve worked with long established practices with multiple partners and experienced the committee style discussions and the distinct lack of unity of direction and high-level decision making.
The practices become stagnant, each partner simply focusing on their own part of the practice. Not running it like a business but often sharing in the profits, perhaps taking an unfair share based on their part or feeling frustrated that others are taking an unfair share for their part!
I’m not saying mergers don’t and can’t work but just like an actual marriage, there has to be shared values, there has to be unified thinking in terms of where each partner wants to take the business.
My recommendation.
Sit with your potential new partner(s) and talk about the future starting with your personal goals.
What are each of your ideal exits and when? How much time do each of you want to work in the practice for? Will this reduce in due course? What role do you each want to play?
Then focus on the business vision and define goals. Don’t just focus on turnover. Think about what the practice will be known for? What types of services will it deliver? Who will it deliver to?
How will it price and market? How will it handle incoming enquiries in terms of partner assignment and handle internal cross serving?
Who will take the reins of Managing Partner/Director? There has to be one, like it or not. Will this be rotated annually or bi-annually? Will each partner commit to the final decision made by the Managing Partner/Director?
What are your common values? Are they aligned?
Consider tapping in to outside help to facilitate these discussions from a neutral party, someone who will ask the uncomfortable questions and highlight the differences they see between you so these can be addressed.
It may sound like a big deal, but you wouldn’t recommend anyone get married without really getting to know that other person as well as you possibly can first. A business divorce is just as nasty as a personal divorce.
How many marriages have you seen quickly break down where the marriage has been based purely on the superficial like ‘good looking’ rather than on shared values?
You don’t have to merge to scale up.
There are alternatives to merging, putting great mechanisms in place to scale up your accountancy practice and creating an accountancy business. For help and advice doing this, grab a free copy of my latest book… Putting Excellence Into Practice by going to www.avn.co.uk/PEIP