Aligning Stakeholder Interests in M&A - Part I
Alignment of Interest: Why it Matters Even More in Today’s RIA Market
A-lign-ment = a position of agreement or alliance
“Alignment of Interest” describes an arrangement or relationship in which all parties stand to benefit from a particular outcome.
Today’s dynamic and fast paced RIA marketplace is forcing many senior management teams to grapple with a series of strategically important questions such as:
How do we achieve sustainable growth?
Do we have the financial ability and human capital to grow faster organically?
Should we consider BUYING another firm?
Should we consider SELLING to another firm?
Should we seek equity capital from a financial sponsor?
Do we have a viable succession plan in place?
If your firm is contemplating any of these strategies, Alignment of Interest among key stakeholders and decision makers is critical. True alignment (agreement) on a wide range of important objectives requires some work, and can be difficult, but is often the difference between a highly successful RIA transaction and one that falls far short of the mark.
Put another way: the cost of lack of alignment can be massive.
Here is Advice Dynamics Partners’ blueprint to ensure RIA firms have Alignment of Interest:
Determine who needs to be aligned
Define the most important issues to get agreement on
Test for true alignment and solve for the gaps
Who needs to be aligned?
It isn’t just your firm’s management that needs to be on the same page. You’ll want to ensure the following people are all part of the process.
G1 Partners / equity holders
G2 Partners / equity holders
Key employees
Your clients’ interests
What issues require alignment?
Preferred growth strategy
Firm value
Desired deal structure
Succession timing for all partners
Ideal composite of an external partner
Future needs for clients.
Desired career paths and growth opportunities for staff
Advice Dynamics Partners strongly endorses the importance of Alignment of Interest for your firm before making any major strategic RIA transactions. Having worked with RIAs — and this blueprint — for nearly 15 years, we stand ready to assist you all along the way.
Reach out to us for more information about how we can help align your firm for future growth.
This article was written by Robert P. Morrow III, Senior Advisor to Advice Dynamics Partners, works with our RIA clients as an executive coach and communications expert. When senior partners at a wealth advisory firm need an effective communication strategy to explain an upcoming merger to employees and clients, Rob is our go-to. Aligning interests among all stakeholders on a strategic transaction is paramount. Rob helps gain alignment through a thoughtful, well-crafted process honed over decades.