“If the seller has a strong next generation of leaders, they should be told immediately when a sale is being contemplated,” said Barton. “If it is a smaller firm, with few staff members, the news can wait until the deal is near completion because speculation about it in the early stages it will just raise concerns among the staff.”
Holman outlined his firm’s process for completing a deal from the first meeting where options are explored through a second meeting of getting to know the firm, a third meeting of discussing valuations and a fourth that is branded as an EP presentation. Then both firms start working on a letter of intent.
What both the seller and buyer are trying to determine through that process is whether the transaction is going to create value for both sides, for the clients and for the employees, LaMena said.
Both sides need to conduct due diligence, make sure the firms have the same investment philosophy, approach to clients and levels of service.
Both sides also have to understand that selling and buying a firm is more personal than something like buying a house. “It’s more like bringing in a roommate,” Barton said.