We have seen a substantial amount of merger and acquisition activity recently. What we are not seeing, though, is the massive layoffs that are often associated with these types of transactions in other industries. Instead, there is a flurry of hiring… albeit often to help replace staff who departed (of their own volition) due to not desiring to be a part of the new acquiring firm.

From what we have seen, this is due to a heavy emphasis on the quantitative metrics, while the qualitative items, such as approach to client service, marketing approach, depth of financial planning, investment philosophies, management style, and personalities are glossed over. These should be examined as close, or even more closely, than the financial components, for the best outcome for the buyer, seller, staff, and clients. In some of the situations we have seen, it appeared what transpired was a firm owner wanted to grow via acquisition due to lack of growth in the last few years, and found someone who wanted to sell, and the price was right… so the deal was done without regard to much else.

One firm had three planners - their entire advisory staff - leave the new organization within 1 year of closing the deal. Now the acquirer is having to spend large amounts of time and resources to replenish the depleted advisory staff.

And so for this month’s article, here are some ideas to consider so you don’t have to spend precious time rebuilding a decimated staff if you decide to do an acquisition.

Communicating the Process and Timeline

It is important for management on both sides of the deal to inform their people on what is going on. Since everyone cannot be privy to all of the details, firm owners and direct supervisors and use some discretion on what exactly is shared and when. Still, at a minimum, it should not be something like: “…we are merging with or taking over this firm, so be prepared for some changes...”, and instead should be: “…we are merging with or taking over this firm because _____, by ____date. Here is what to expect, because we want you to be a part of the new organization, and here is what we need from you during these times…”

Remember that most humans don’t like surprises, so communicating any impending culture or other changes that might impact an employee’s career should be discussed early and often. Change is difficult enough, but a pre-communicated change is still easier to manage than a surprise one.

Organizational and Management Support

Be certain that you’re physically present and available to your existing team, and new team members as well.

At least in the beginning (right after an acquisition closes), having a manager that is local and more accessible tends to work better than people reporting to someone on the opposite coast whom they have never met.  Make sure you are reasonable and credible too. Setting unrealistic guidelines because you are not there and have not witnessed the unfair workloads and setting unattainable goals will harm morale.

When telling the story about the merger or acquisition, it may be obvious how it benefits your career as the owner, but frame for your team(s) how it is a growth opportunity for them as well.

Finally, shoot straight with your people on why all of this is happening. If they find out later, which they will, that something else was the catalyst, you will lose credibility and they will leave.

Financial Compensation and Benefits

Resist the urge to scale back or eliminate altogether your training and professional development programs to make the financials look more attractive.  You can even take it one step further and increase everyone’s compensation to demonstrate that you appreciate the extra work they will have to put in to successfully merge two different organizations. Be sure to tie the comp to incentives to stay and keep clients, continue momentum, learn the new systems, complete integration within certain time period, etc. If this seems like a non-starter and/or a shot in the dark, you could always ask your team members, “What would cause you to take a job with another company tomorrow? If they are honest, you should have some valuable insight into what is important to them and can put your focus there.

Remember there is no silver bullet when it comes to ensuring employees will stay with you long term, but consider these strategies to help maximize the chances for employee retention when going through a merger or acquisition.  This will shape an attractive culture to integrate, cultivate, and retain new planners – giving them little to no reason to seek employment elsewhere while elevating client confidence, increasing enterprise value, and leveraging your time to focus on components of the business that you enjoy most.

In the meantime, if you are going through a merger or acquisition or are planning one soon, and need to assess any current team members or hire additional staff, we are here to assist firms by allowing you to outsource these burdensome and time consuming activities to us. You can view more information about our services, and see some of our other online materials, at www.newplannerrecruiting.com.