Firm Merger Challenges
Professional service firm mergers can create great opportunities for increased revenue, internal client referrals, and heightened geographical penetration. They are also filled with a range of challenges, including human resource issues, client retention and technology and system integration.
Planning is crucial to the success of professional service mergers. We suggest that close consideration should be given to the below areas prior to the execution of any professional service firm merger to increase the chance of success in such transactions.
What is the Goal?
Are you aiming to diversify your services? Maybe you are seeking geographical penetration into new markets? Potentially you are looking to access valuable skill sets or technology?
Defining the goal of any proposed merger is vital to ensuring any transaction is centred on making your goal a reality.
Branding and Marketing
Professional service firms typically rely on strong brand presence, and custom marketing solutions to convey their unique service proposition to clients and the marketplace in general.
Mergers therefore require stringent planning and strategy that define how the brand image of the combined firm is to be conveyed post merger.
Oftentimes, in cases where one firm holds a dominant market position a decision may be made to adopt that firm’s branding across the newly merged entity. In such cases, communication plans should be put in place that allow for minimal client confusion.
Other times, a combined brand may be adopted over a transition period to inform clients gradually, and to ensure that clients aren’t concerned about a change to the nature of their service delivery, or to the relationship they have built up with your firm.
A strong marketing and promotional plan should be in place as part of any merger, ensuring the market fully realises the benefit that the combined firm can offer to clients.
The Human Factor
Professional service firms are human driven businesses. Accordingly, it is vital to ensure the combined team is on board for the journey, and committed to the change.
Educate all staff on the benefits of the merger. This will ensure they are best placed to convey the benefits to clients and their wider networks.
A great trick during the transition period of any professional service firm merger is to introduce a ‘buddy’ program, whereby staff in similar or comparable roles in each legacy business are teamed together as ‘buddies’, with regular catch ups scheduled. This allows for knowledge transfer, and provides scope for staff to better understand the value that can be contributed to clients as a result of the merger.
Technology and Systems
Technology and system costs are normally one of the most visible expenses to emerge as a result of professional service mergers. Technology and system changes can also cause immense pain and frustration to your staff, as well as potentially contributing to lost productivity.
Although technology and system integration is frequently highlighted as a major benefit in professional service firm mergers, in our experience the benefits are often overplayed.
In order to minimise the disruption that can emerge from technology and system integration, it is best to implement any changes in this space, slowly and carefully, with constant consultation with all relevant staff.
Find Out More
Although there are many challenges, carefully executed professional service mergers can provide significant benefits.
If you are seeking a professional advisor to assist you with the merger, acquisition, divestment or valuation of a business with an enterprise value of between $1 million and $50 million please contact Quinn M & A on 02 9223 9166 or email [email protected] to find our nearest office.