Avoiding deal fatigue in mergers and acquisitions advice

M&A deals are a crucial part of many financial licensees’ strategies for future growth, with the process typically taking about six months to complete. However, there is a significant risk of “deal fatigue” setting in during this time, potentially leading to deals falling through. To avoid this risk, experts suggest some key strategies for both buyers and sellers to keep the momentum going.

In recent times, several notable M&A deals have taken place within the financial advice industry. Shaw and Partners acquired Kennedy Private Wealth in Sydney, Link Wealth acquired Xponential Advisory on the Gold Coast, and Coastal Advice Group merged with Calder Wealth Management on a national scale. These deals represent the trend of inorganic growth through mergers and acquisitions within the sector.

Part of this growth trend may be attributed to private equity funding, as seen with companies like AZ NGA and Ironbark Asset Management. Ironbark successfully merged with Invest Blue and acquired Mercury Private, thanks to a $30 million investment from Soul Pattinson. Similarly, AZ NGA received $240 million from US private equity Oaktree Capital to facilitate its expansion plans focused on acquiring “super firms.”

Despite the potential benefits of M&A deals, the process can be taxing, with Steve Prendeville of Forte Asset Solutions highlighting the risk of deal fatigue. He emphasizes the importance of managing this risk effectively to prevent deals from stalling due to unexpected delays or changes. Callum Mitchener, CEO of Wealth Architects, notes that deal fatigue is a common occurrence in M&A transactions but underscores the need for proactive management to keep deals on track.

Mitchener reveals that Wealth Architects typically has numerous deals in the pipeline simultaneously, but only a fraction of them reach completion. Recent successful acquisitions include Fiducia Private Wealth Management in Cairns and Fitzpatrick Financial Services in Melbourne. Mitchener’s comments shed light on the challenges faced by both buyers and sellers in navigating the complex M&A landscape while maintaining deal momentum.

In conclusion, M&A deals are a vital component of growth strategies for financial advice firms, but they come with inherent risks such as deal fatigue. By following expert advice and proactively managing the process, both buyers and sellers can increase the likelihood of successful deal outcomes. With careful planning and strategic execution, M&A deals can create value and drive growth in the financial advice sector.