Author: Bryce Cleveland

Disrupting the Routine: Change is the Best Way to Grow Your Business

Driving change or creating disruption in your firm can be challenging, but we would argue it is one of the best ways to spur significant growth. Disruption forces you out of your comfort zone and requires you to do things differently, which can open doors to new opportunities.

Change for many RIA firms often comes in the form of M&A activity — both as buyer and seller. The third quarter of 2021 hit a record number of deals and the industry is on pace for yet another record-setting year. Although pursuing M&A may seem daunting, it can help firms rapidly achieve growth that would take years to realize on their own.

Realizing the benefits of disruption are daunting, and it is something our team discusses with advisors across the GVA network and beyond every day. Here’s what we tell them:

Change goes both ways

M&A has the potential to benefit both the buyer and seller in regard to resources and talent. In many situations, the acquiring firm has more dynamic platforms and tools that can be leveraged by the acquired firm to advance their business. However, we’ve also seen situations where the acquired firm had access to a technological resource that the acquiring firm previously didn’t, and was able to start utilizing thanks to the transaction.

When advisors partner with GVA, they gain access to both a wide variety of resources and an expansive network of fellow advisors. In turn, we welcome fantastic new talent who bring different skills and expertise that can benefit both our leadership team and advisor network. When there is chemistry between the buyer and seller, M&A can be a win-win situation for all involved.

Deciding when to make a change

At GVA, there are two transaction scenarios we often encounter. The first is an advisor who wants to disrupt their entire practice to partner with a firm like GVA for added resources and scale. They are taking a chance because they think it’s the best move for their business over the long-term. The second situation is when an advisor decides they want to sell their business or hire a junior advisor in order to build a succession plan. These individuals are seeking a true succession plan, while looking to safeguard their legacy and their clients’ experience.

In both scenarios, there is always a compelling reason that triggers the decision. Owners of financial advisory firms do not lightly decide to sell their business or merge with a new partner. These are huge changes that must be approached with proper deliberation.

At GVA, we always ask advisors who are considering some form of M&A, “What’s the reason for this decision?” Advisors looking to partner with another firm often want to leverage the buyer’s resources and platform to grow their business and enjoy more support. Advisors seeking to build a succession plan, especially those who are reaching retirement age, typically want to enjoy life experiences that they can’t while managing a $150 million to $200 million book. For instance, they may want to travel more or spend increased time with their families. We ask this pointed question to ensure our motivations, outlook and philosophies align from day one so we can build a successful partnership.

Addressing the emotional aspect

For many small business owners, the decision to sell their practice is an emotional one. Accordingly, the buyer should understand and respect the emotions driving the decision. As a seller, it’s important that you feel a connection to and synergy with the buyer. The primary focus isn’t necessarily on how much money you can get for the business or any other individual benefits the sale might yield.

The decision should also be rooted in what will be best for the business’s growth and your employees.

Ask yourself what the structure will look like for your clients and the team. For your clients, will they work well with the potential acquiring firm, and will they enjoy new resources as a result of the transition? For your employees, will there be more opportunities for growth than are available to them now? It’s crucial that the acquiring firm will not only be able to handle your business, but also offer your clients and employees greater advantages.

Calculate the risk

At GVA, we sit down to calculate risk with every advisor who is considering partnering with us. We’ll talk through various scenarios to ensure their vision for their firm’s future and their growth goals align with what GVA can offer. This requires extreme transparency, and may entail telling advisors that their expectations aren’t realistic or perhaps we aren’t the best fit. But in the end, it allows the advisor to decide what is best for them.

M&A can help firms reach their goals and achieve growth that might be very difficult to attain organically. However, a successful merger or acquisition depends on aligned visions and synergy between partners.

For more insight on the M&A process and opportunities for advisors within our network, schedule a call with us. Connect with us on LinkedIn and Facebook for our latest insights and team updates.

M&A Leaders by Design: How GVA Has Proactively Built an Attractive Partnership Brand

How to Add a Partner to My Business? - Ontario Business Central Blog

RIA dealmaking activity continues to break records. While the pace of transactions slowed in early 2020 as the pandemic took hold, acquirers produced strong numbers in the latter half of the year. According to research from ECHELON Partners, 2020 dealmaking activities outpaced those of the prior year and fourth quarter 2020 activity was up 25% over the third quarter.

As activity continues to heighten, more RIAs are putting their name into the mix on both the buy and sell sides of the equation. But not all transactions are created equal, and as the landscape becomes more active, the need for strong culture- and values-based partnerships is increasingly apparent.

At GVA, we see tremendous potential for advisors to grow when aligning with the right team. That’s why we have proactively built GVA into an attractive partner enabling RIAs to thrive within our network. We are solving the problems that hamper growth and empowering our advisors in the process. Here’s how:

Operational Activities Burden Advisor Growth Opportunities

Running an effective and efficient RIA involves multiple moving parts and the support of various specialists to meet all legal and regulatory requirements. This creates a significant operational burden on many small-to-mid-sized RIAs, and the need for support and resources is a key driver in advisors wanting to sell.

We have designed effective in-house capabilities that allow advisors to easily assimilate with our firm, support growth and create economies of scale, including:

  1. Internal and external compliance partners: We have an in-house compliance team that onboards advisors, monitors compliance obligations and ensures each advisor can focus on his or her business and clients. We also partner with Cipperman Compliance Services  externally to ensure our team has the most current and comprehensive resources available.
  2. Dedicated asset management arm: Managing client assets requires specific expertise and resources. The Valor Asset Management team sits on-site with our advisor and leadership team in our Paoli, Pennsylvania, headquarters and offers various investment models designed to mitigate risk, support performance and save advisors’ time.
  3. Customized technology solutions – To remain competitive in today’s environment, having access to sophisticated technology is key. One of our main technology offerings is our compensation platform, AdvisorBOB, which provides full transparency into income channels and expenses so advisors can better plan and ensure they are properly compensated.
  4. Long-standing professional relationships – GVA has prioritized aligning with the right professional partners to support long-term growth for its advisors, including legal resources and experts at Stradley Ronon and the broker-dealer support of LPL Financial.

The Right Partner Is One With Flexibility

There is no one-size-fits-all solution for sell-side RIAs, so it is important to align with a partner who is willing to be flexible and customize the partnership to meet evolving goals and needs. In our conversations with advisors, we recognize there are varied reasons to pursue a sale, from wanting to fortify a legacy, to providing ongoing support to the client base, and facilitating longer-term and scalable growth. Each of these motivations is important to the seller and for good reason. We work to understand the “why” behind the sale and are diligent in customizing the partnership to meet that goal in a way that appeals to both the seller and our team. This commitment yields a stronger partnership from the outset.

Relevant Experience, Strong Leadership

The incredible pace of transactions currently occurring may suggest such moves are systematic. Partnering with an experienced buyer is essential to ensure the deal flows smoothly and all aspects of the transaction are assessed prior to the commitment. Our M&A team is entirely dedicated to growing our firm via acquisition and supporting our advisors in pursuing growth via acquisition as well. We have a strong and experienced leadership team that is fully focused on the M&A space and appropriately executing each deal. From properly valuing the book of business to sourcing financing and supporting onboarding measures, our team has hands-on experience in creating successful transactions.

The Client Experience Reigns Supreme

Ask any advisor about the motivation behind their business, and most will tell you it is to help clients achieve their financial goals. When we engage in conversations with advisors who are considering selling, we often hear them emphasize the importance of maintaining the client experience and enhancing the services offered. We counsel our advisors and potential partners to align with a firm that offers obvious synergies but also brings something different to the table. As you navigate the integration process, remember that you are gaining new intellectual property, economies of scale and offerings for clients.

In a 2020 survey, RIAs reported that achieving organic growth was a significant challenge. When aligning with the right partner, growth no longer represents a roadblock to success. We sit on the same side of the table as our advisors, serving as advocates for them, their firm and their future. Aligning our objectives and actions in this way paves the road to success.

For more insight on how we can help fulfill your firm’s growth objectives, schedule a call with us. Connect with us on LinkedIn and Facebook for our latest insights and team updates.