4. Succession needs: The firms we consider acquiring require capital to address their own succession needs, something time alone would be unable to solve.
The acquisition of McGill met all four of these criteria.
Managing Expectations of the Future
In a complex business transaction, more must be managed than just the process. Most important is managing expectations: yours, your staff’s, your partners’ and those of the team you acquire. The Fiduciary Network’s experience was as important as its capital. In some ways, it was easy to create the critical deal structure and align the partners’ economic interests. Perhaps more challenging was managing the psychology of top-level stakeholders who would be signing the closing documents. These included:
• All Brightworth partners, both those in the first and second generations;
• Our funding source, the Fiduciary Network;
• All the McGill partners, including the first-generation partners leaving the firm, as well as the first- and second-generation partners who chose to stay.
It was critical to understand the interests of these parties in the negotiations—their emotions, career goals, relationships and economic interests. Most important was understanding their expectations for the future, since their future was about to change. Helping them prepare for a new one with new partners was our responsibility as acquirers. During this process, we knew that if we were not clear, some assumptions could be perceived as promises, while real promises could be misunderstood.
Managing the expectations of individual stakeholders also meant understanding their self-interest. In an acquisition, people are first concerned about how it affects them personally—at least until they are confident they are going to be properly rewarded for their contributions and importance. We also understood that all the stakeholders had some leverage (particularly in the client relationships they enjoyed) that they wanted recognized.
Because we allocated stakes in the organization in a way that reflected the contribution and importance of individuals (not just basing it on their “legal” ownership), it was easier for us to ask these individuals to not only accept but ultimately enthusiastically support the acquisition. Certainly, not everyone’s interest was identical. However, several of my partners gradually shifted from asking “How are we going to do this?” to saying, “Wow, what a future!”