Nonetheless, a recent survey conducted by Aite Group and published by NFP Advisor Services suggests that advisory firm acquisitions may be happening far more than anyone realized, but are occurring primarily within wirehouses and large insurance-affiliated broker-dealers, and just not as much in the independent broker-dealer and RIA channels. On the one hand, this may be driven by the fact that large firms have had even more incentive to ensure a smooth transition to allow the parent firm to retain the clients; on the other hand, large firm acquisitions may also simply be driven by the fact that they are a closer-knit community and the majority of acquisitions seem to occur primarily through the existing personal contact network of the acquirer!
In addition, the Aite/NFP study also provides a rather unique glimpse into “what’s working and what’s not” in the world of advisory firm acquisitions, by comparing and contrasting the characteristics of deals and their subsequent implementation between firms that were happy with their acquisition, and those who later regretted it. The results paint a fascinating picture, with some firms patiently cultivating a network of potential firms to acquire, patiently evaluating and slowly vetting, but ultimately paying top dollar for quality firms and acting quickly to integrate the clients once the deal is consummated. By contrast, the study also finds that while many firms are discovering opportunities that “fall into their lap” when a firm approaches them to be acquired, often for a price that’s on the cheap, that these reactive deals are actually leading to the most problematic implementation, the lowest retention, and the worst satisfaction levels after the fact, despite their appealing price!