August 3, 2007
JMB: Sure, much depends on the scope of a firm's internal capabilities and how mature they are as an organization. Generally, the longer a firm is with NFP, the more likely they are to know what services are available to them and how to best access them.
HSG: What do you do to ease the integration process and help firms understand the scope of what's available to them?
HSG: What are the most likely hiccups a firm will encounter during the integration process?
JMB: Well, this has changed a lot as our business has evolved over the past nine years. In the beginning, when we acquired a firm everything stayed the same, which made the transition to NFP very easy. Once we went public and had to comply with Sarbanes Oxley, we implemented systems for the accounting and financial controls for all our firms. These requirements were much more onerous than many firms expected. But again, it was helpful that the advisors were shareholders because they understood that it had to get done. Now this infrastructure is firmly in place and the ramp up into our system is addressed at the time of acquisition.
HSG: And these days?
JMB: Our broker-dealer, NFP Securities, has an unbelievable reputation and has become a real advantage in the recruiting process. As part of the acquisition process, we require firms to switch to our broker-dealer, which can be difficult. The good news is that we do more acquisitions than anyone so we've learned how to make the transition as smooth and speedy as possible. And because we had to be able to handle the more sophisticated business of our high-net-worth clients, we learned early on that if the central processing point is good, it can ease things considerably. We made some big investments of capital, time and talent to get where we are today.
HSG: Approximately how long is your due diligence process?
JMB: On our end, the whole process takes about 60 to 90 days. We verify revenues and expenses, visit the office, perform an investigative search on the firm, it's a very intense process. If an advisor is nervous or skeptical, or just not ready to make the decision, it can run much longer, sometimes years. But we stay in touch with the firms we like and when the owner is ready, it's amazing how fast we can move.
HSG: You did 23 acquisitions in 2006?
JMB: NFP has a full-time M&A and due diligence team, which allows us to do as much internally as we can. Our firms are also a big source of leads for us. They tell us who is good in the marketplace, it's great insight for us.
