Research
LEt Us do the research
Research is perhaps the most important phase of the The Empathetic Buyer™ Process. First, we conduct research on the market area as defined in our client’s criteria, along with the characteristics of the book or practice that the client wishes to acquire or sell to. In the case of merger, the criteria defines the type of advisor the firm wishes to merge with. From the information we have either accumulated over the years or purchased, we define the target market and the pool of practices or advisors we intend to contact. We further conduct this research by contacting the target firms or advisors directly to refine our targets. Once a firm becomes a “suspect” we conduct deep due diligence to determine those that will eventually be introduced to our client.
The subject of research and granular due diligence is far beyond the scope of a short article. We will perform a valuation on each firm that we have interest in. We analyze the book or practice employing both the discount cash flow and market approaches.
Keep in mind that your primary objectives are three-fold.
Determine the value of the firm to you.
Determine the likely cash flow that the firm or book will produce in your hands.
Predict the realistic percentage of clients and assets that are likely to move to you in a transition.
Look at each revenue stream individually and judge the likelihood of it continuing under your control. We ask how the advisor’s clients were sold and why the seller believes certain clients, especially HNW clients chose him or her. This is more than simply discerning between reoccurring revenue and transactional revenue.
The point here is to remember that an acquisition is only successful if you have a very high transition percentage. Our standard is 97%. This will never happen if you try to make a lot of changes to the manner in which client assets are managed. People do not like change. You do not have to be perfectly aligned, but if you are an active manager, do not waste your time with a group of clients who have been sold on passive investing, or vice versa.
A critical objective of The Empathetic Buyer™ Process is create trust between buyer and seller. Trust between the parties will allow each of them to assess the needed elements in a purchase or sale. We are looking to obtain a strong endorsement for the seller. In addition, the research we perform is done to determine whether or not that endorsement is likely to help you keep the clients in transition and create the needed cash flow, post transition.
If you would like to learn more about our Research process, or would like to learn more about how Moisson Partners, Inc. can help, select the Contact Us link below.