First-Time Buyer Series: Check Your Ego at the Door after the Close

This week, a bonus article on something you should think about early and often. Subtitle this “Give a Little, Gain a Lot.”

Consider the following, reasonably common, situation. You have come to an agreement with the Seller and Closed on the transaction. Now you have begun to effect the transition, along with the Seller’s help. In this situation, as in most acquisitions of investment advisory firms, the success or failure of the deal is directly related to the assets and the number of clients that agree to come to you. You may (should) have a contractual agreement that the Seller will assist you by telling the clients that he or she supports you as his or her successor. However, there are degrees of help.

Once you have an agreement to purchase, it is only natural to begin thinking of the accounts as your own. The Seller does not have any legal standing with the accounts. He or she gave that up when the Definitive Agreement was signed. However, the power in the situation has now moved; not to the Buyer, but to the clients. Who controls the client’s opinions at this point? Not the Buyer. At this early stage of the transition, the Seller still has all the influence with the clients.

The Buyer needs the Seller to be excited about the transition. If you are the Buyer, you need the Seller to be thinking positive thoughts about you throughout the transition process. If there is a lack of enthusiasm, it will negatively affect the transition. All it takes to lose a key client, is for the Seller to be less than enthusiastic when telling the client what a great advisor and person you are. He or she can go through the motions to tell clients to move to you, but if the client senses a lack of zeal by the Seller, your chances of keeping that client reduce exponentially.

I am not suggesting you allow the Seller to push you around, but you cannot let your ego or your inflated sense of control make the Seller feel disrespected. Think about what you say, and how you say it. Keep in mind the following facts:

·        There is a good chance that the Seller is older, if not significantly older, than you are and expects to be treated with respect. Have you ever stepped in front of an older person in the grocery store without saying “Excuse me?” What was his or her reaction? (I am 63, and I too get irritated when an older person thinks I should give them leave, simply because they are much older. However, I have to remember that they are trying to recapture some respect that perhaps they feel they have lost.)

·        Respect what the advisor/Seller has accomplished and act accordingly.

·        If you are an owner, you are used to being in charge; everyone in the office reports to you. Sellers are generally used to the same situation. For each of you, there is an adjustment. The Seller is no longer in charge, but does not work for you. You have to get used to someone in your professional life (possibly in your office) who is not there to take orders from you. Be understanding, and ask for understanding.

·        Finally, keep remembering that this person is going through a very emotional time. Ending your career can be kindred to losing a child or a spouse. Consider having a little empathy; it is in your best interest. Even if you are not empathic, think of your own ROI.

You may have the legal control, but you still need the good graces of the Seller until you are on solid ground with the new clients. Use your head. Don’t cut off your nose to spite your face to prove that you are in charge. Check your ego at the door; at least for a while. What is more important, your ego, or the revenue from a group of million dollar accounts?

Casey M. Corrie