Open-API Tech: Speeding Up & De-risking the Acquisition of IFA Practices

I regularly see examples of the frictional drag that fragmented, outdated IT architecture is on the IFA acquisition process.?

It’s a reasonable assumption that, given the gathering pace of acquisition over the last two years, the pool of potential acquisitions is shallower or, at least, with the low-hanging fruit picked, those that remain will take more convincing to sell.?

That’s not to say this market is not buoyant. The opposite is true. But acquirers, with competition increasing as private equity money remains waiting to strike, will have to work harder on the ‘sell’.?

Which is why we mustn’t let technology be a blocker.

The title of this blog could well be a 100-page article in an empirical journal, so I don’t take the challenge of condensing this topic into under 1,000 words lightly. Nor will I achieve it! But I hope to shine a light on the myriad high-level areas in which unforeseen tech-related delays can manifest, and with material commercial impact on the consolidator business.?

Acquisition is Risk

Post-completion, that risk is directly proportional to the length of time taken to embed the acquired business. M&A 101, of course.?

In the case of an acquisition where the target company hasn’t embraced technological change (and granted that is not always the case) the common consequence is either to accept and work with the siloed, legacy tech, or to bolt TargetCo onto the consolidator’s also siloed or rigid architecture.?

Either way involves concessions that don’t favour either side - or the clients involved - and there are risk-magnifying effects.?

Fewer Hands Make Light Work

Staff on both sides will have to connect the dots across a multitude of areas which for any mid or large business acquisition can be immensely complex - in a dimension that isn’t clear at the outset.?

These manual tasks can be time-consuming, error-prone, and resource-intensive, and they hinder the efficiency of both the acquirer and the acquired businesses during the integration process.

Among others, common issues relate to:

• Data?Migration: Manual data entry and verification due to non-compatible systems.Manual reentry of client data due to lack of integration with other tools/systems, leading to redundancy.Consistency: Manual data validation and reconciliation to ensure consistency.
• Compatibility Issues: Manual code adjustments to make the systems work together (developer time and resource is immensely costly and ‘scope creep’ is high).
• Workflow Redesign: Time-consuming process of reengineering and the creation of new training materials.
• User Access: Granting individualised access to multiple systems. Who needs what access?
• Reporting Challenges: Manual report generation and data reconciliation between systems can be especially risk-laden when the workflow is part of a regulatory responsibility (e.g. transaction reporting).
• Compliance Hurdles: As well as the above, add manual audits and document creation for regulatory compliance, or differing standards in report quality.?
• Troubleshooting Struggles: Manual issue resolution and increased customer support efforts.

Risk Mitigation?

To mitigate these challenges, organisations should consider adopting customisable and flexible open-API-based systems that streamline integration and not only reduce the need for manual effort. Those come with the ability to customise user journeys and advice processes, and generally provide a much-enhanced client experience at a critical time - benefiting the longevity of the client relationship.?

For a consolidator business that perhaps hasn’t given its tech stack the attention it requires, this can markedly reduce the risks associated with deals as well as increase their acquisition and integration speed. In the end, this facilitates processing a greater amount of deals.?

The aixigo:BLOXX Approach?

Despite the sophistication of the underlying technology, the concept behind the implementation of our aixigo:BLOXX modules is simple.

The open API layer of our solutions can connect to almost any third-party system, which comes with a multitude of benefits, including streamlining or customising workflows, improving data accuracy, and reducing manual tasks. Overall, this benefits efficiency, cost reduction, and faster decision-making.?

Depending on your requirements, not only the user experience - or value delivered - for clients and staff is markedly improved. Even the post-deal risks that come with acquiring a long-established independent practice are minimised.