Finding the right partner as you consider options for your firm’s future requires a strategic approach, one that will keep you on track in your search for a partner that best achieves your objectives and aligns with your personal preferences. Partnerships and deal transactions work best when partners are complementary and compatible in culture, investment philosophy, client demographics, technology and a shared business vision. Both parties need to assess the other to determine if they are a good partner regarding cultural fit. The most successful deals happen between parties genuinely trusting and liking each other.

Culture relates to the group’s collective behaviors, beliefs and values. While these attributes may be more challenging to evaluate, due diligence can help determine whether a prospective partner’s culture aligns with your own. Behavioral research shows that trusting your gut when judging others can lead to erroneous conclusions. This is not a risk worth taking, given the stakes involved when determining the future of your business.

Identifying the Right Cultural Fit

Like creating an ideal client profile to help focus business development efforts, you need to determine your ideal partner. Fundamental questions, from both a business and personal perspective, that should be addressed when determining your partner criteria: What are the requirements the prospective partner must have regarding culture and business philosophy? What key stakeholder values and personality characteristics are preferred?

Identifying a prospective partner who meets your criteria and whom you feel you can trust and work with provides a strong foundation on which to build. Establishing trust and a good rapport with a prospective partner is critical before moving forward to the more technical aspects of a transaction. The more you get to know a prospective partner, the better your chance of assessing your compatibility. Make the most out of the due diligence process by speaking with the M&A team or principals and those responsible for running operations, investments, planning and technology. Onsite office visits will give you a good sense of cultural fit and enable you to see how their team interacts and how they treat each other. Socializing outside of the office also provides the opportunity to make sure your beliefs and values are aligned. As you go through the due diligence process, we offer some key questions to consider when assessing cultural fit and compatibility.

Assessing Compatibility: 5 Key Areas for Consideration

Vision for the Future

The prospective partners should have frank discussions about their visions for growing a firm. Not only should their visions closely align, but their plans for growing the future firm and their preference for achieving growth should also be. Inherent in these discussions is the discovery of each partner’s receptivity to change and the ability to accept new ideas for growth. If there are certain areas where partners are inflexible to change, is this acceptable to the other partner?

Management of Personnel

At a broader level, the prospective partners should determine if they approach the management of their company and personnel in the same manner. An example of this includes examining whether they approach management in a hands-on or hands-off manner. Are their organizational structures informal or formal? As the prospective partners drill down, they should look at how the two firms will merge and manage their existing employee pool. This can begin by evaluating the skillsets and capabilities of the employees of both firms to determine whether the employees of one partner complement the other partner. If redundancies exist, will existing personnel have a place in the new firm over the short and long term?

Clientele and Client Servicing

One of the most important items to look at when evaluating a potential partner is the alignment of the clients of both firms. This may require the firms to step back and develop personas/profiles of the various segments of their client base. This can include factors such as affluence, AUM, age, location and other demographics. Once this is accomplished, the firms can then evaluate their definition of what service means in terms of providing value to clients and whether their current approaches to client service are aligned. Do client servicing processes exist to accommodate the needs of both firms’ clients?

Investment Philosophy

Examining the client bases of both firms, as discussed above, enables the prospective partners to look at their respective investment philosophies to determine how their investment strategies, portfolios and products align with the combined client base that will result from the partnership. A consideration that may come into play is to what extent both prospective partners use outside resources and research in constructing their client portfolios.

Operational Compatibility

The prospective partners should closely examine the processes and procedures in place to run their firms. This should encompass looking at technology, systems and platforms that support all the backend and functional areas of the organization. To what extent do the partners share commonalities? Can redundancies be eliminated to make the combined partnership more cost-efficient? Identify what outside resources are currently being utilized by each partner and whether they can be eliminated once the partners merge their operations.

Final Thoughts

Completing a partnership deal or transaction does not end at contract signing. Recognizing the importance of preparing for how the parties will integrate when the deal is closed is essential. A smooth transition requires a detailed implementation plan that requires cooperation from both partners for a period of time. At the WAA, we have created a community of like-minded advisors who support each other through all stages of business growth. Contact us, and we will be happy to discuss our culture and how we might align with your needs.

We help advisors establish and grow successful wealth management practices. To learn more about how we can help you amplify your life’s work, contact us at You can follow us on Twitter@theWAAlliance and on LinkedIn.

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