Merger: More than the sum of its parts

For a successful strategic partnership after a merger, flawless due diligence and complete cultural alignment are essential.

The merger of Yield Advisory and Focus Professional Group, which created one of the Sunshine Coast’s largest accounting and financial planning firms, appeared on the surface to be proceed smoothly and relatively quickly.

Behind the scenes however, senior staff from both firms supported by Kev Ryan had carried out an enormous amount of research, due diligence, negotiation and cultural analysis.

It was all to ensure staff members from both firms, as well as clients and other stakeholders, had a positive, respectful and engaging experience as the new entity took shape.

“Before the merger, we were already a first mover into the Maroochydore CBD, and were looking to acquire a firm to bolster our footprint in the Sunshine Coast region,” says Lachlan Ballinger, Managing Director of Yield Advisory.

“My wife and I were founders of the business and we commuted to Brisbane from the Sunshine Coast for a long time.”

“We always wanted to create a strategic partnership or acquisition, and that was the conversation I had with Kev Ryan, about finding a great local operator that had been on the Sunshine Coast for a long time.”

Kev introduced Lachlan to a number of firms, including to Focus Professional Group.

“Kev was the facilitator, and we had a number of boardroom strategy meetings, as well as coffees and lunches with Allen Hertel, the owner of Focus Professional Group and a very impressive guy,” Lachlan says.

“That’s how we landed on that particular firm, but that was just the beginning.”

Transaction advisory: There no one-size-fits-all

“Patience with, and trust in, the process will overcome the challenges of making a good match,” says accounting firm transaction advisor Kev Ryan.

“While we follow a process, it’s critical that we don’t try and cookie-cut a solution. Every transaction has its own peculiarities, especially mergers. The individual?requirements of each party must be respected. You can’t template or rush transaction advisory.”

Lachlan agrees that it’s important to follow all of the relevant steps recommended by an advisor such as Kev, during the merger/acquisition process.

“We’re constantly talking to our clients about following the proper purchase process of undertaking thorough due diligence,” Lachlan says. “So, it was good for us to do that ourselves, to get that experience and find out exactly how it works.”

A contract was signed in February, and that’s when the due diligence process really took off, Lachlan says.

“It’s the people in the business who have relationships with clients,” says Lachlan, who has always had a deep focus on staff and client engagement. “It’s really important that they’re all looked after during this period of change and uncertainty.”

That’s why a cultural match is so important, he says. If the two firms share similar cultures and values, the transition for each will be easier and smoother.

“When considering the merger, I had to put my team and our clients at the centre of my focus,” Lachlan says. “The more I looked, the more I saw how similar we were in terms of providing a proactive approach to servicing clients to meet their long-term objectives.”

Staff members spent time sitting down with key clients, too. These personal meetings were important to ensure good communication around what was going on, not just to reassure those clients but also to explain the sometimes significant benefits they might enjoy.

“As the saying goes, size does matter,” Kev says. “These days in accounting, that saying is well paired with ‘safety in numbers’.”

“Life as a sole practitioner is becoming almost impossible. Clients, and importantly the team, benefit from more than one partner’s experience and perspectives, especially when addressing strategic business decision making.”

How important are shared technological platforms?

Often, Kev says, having common technology stacks between two firms can be of great benefit during a merger or acquisition.

In this case, Yield Advisory used different technology to Focus Professional Group and therefore the two firms had dissimilar processes.

The differences even came down to the fact that Yield Advisory used only Apple computers, where Focus Professional Group was PC-based.

Key to solving this and other issues that commonly come up during a merger is great communication, he says.

Both firms were excellent on their own. Together, with a focus on shared culture and open communication, the new, combined business benefits from all of the various experiences and points of view.

The power of a great adviser

“Kev has been a real facilitator the entire way through the process,” Lachlan says.

“Kev’s network is outstanding, and he’s got a very good reputation. That was vital during the early period when we were speaking with a number of businesses. He was able to open up doors that otherwise would have been locked.”

“He was great to have as an intermediary and to facilitate a negotiation, because he knows what’s going on in the industry and what people are paying for firms. That took the angst out of that part of the process.”

Finally, Lachlan says, Kev kept the focus on relationships.

“When you’re buying an accounting firm, you have to understand that it’s all about relationships,” Lachlan says.

“We’re not selling products, we’re selling relationships. So you need to make sure the process is fairly seamless for owners, staff and clients. That’s what I really appreciated about Kev – he was able to make the process really smooth.”

Article by: Chris Sheedy of The Hard Word