Mastering the M&A Game for Buyers and Sellers with Charles Schwab's Nikolee Turner

Guest: Nikolee Turner, MEd, MBA, Managing Director, Business Consultant, Advisor Services at Charles Schwab.

In a nutshell: There’s an old saying that a good deal makes both sides unhappy. But, by some estimates, as many as half of the RIA owners who have sold their firms recently have reported seller’s remorse. And in an M&A transaction, you can bet that if something isn’t sitting right with the seller, there are probably a significant number of RIA buyers who are struggling to achieve alignment around culture and goals in their new, bigger firms.

On today’s show, Nikolee Turner explains the three-phase approach to M&A that Charles Schwab believes can help firms avoid these unhappy marriages. We discuss how advisors can maximize their firm’s value, mitigate risks, and ensure alignment with their long-term vision. Nikolee also shares the top mistakes advisors make in the M&A process, how to prepare their firm to attract ideal partners, and the critical role of culture and communication in making these transactions successful.

.Nikolee Turner and I discuss:

The most common reasons that advisors are approaching both sides of M&A.
Typical runway length towards M&A.
How to communicate M&A plans to your teams to achieve alignment and avoid spreading panic.
Why “connecting” too early in an M&A process can be a major mistake.
Best practices for a successful post-transaction integration.
Finding the sweet spot between “growth mode” and generating profits.
Goals for culture fit and enhancement.
How independent firms can achieve scale without replicating the old wirehouse model.

. Quotes:

Nikolee Turner on the state of M&A and Schwab’s three-phase process:

“What we see is a lot of sophistication entering into these transactions. Buyers are more sophisticated. Even sellers have to be more sophisticated. And so we, through our research, our Benchmarking Study insights, and the experience of our consultants, can help advisors prepare for their M&A interactions. And we do that through a framework that has three phases: Envision, Prepare, and Connect. We work with advisors to help them in the Envision phase to think about what is their reason for M&A. In the Prepare phase, we’re helping them put actual pen to paper and be ready so that they can be more proactive. And then in the Connect phase, we’re helping them get more efficient so that they can really streamline and home in on those ideal partners.”

Nikolee Turner on what buyers are looking for in potential partners:

“I’m hearing more and more that acquirers are seeking talent. We know that there’s a tremendous need for talent in this space. And so through this inorganic activity, firms are being able to acquire talent that has been difficult over the last few years to gain. We see lots of emerging large firms where they’re seeking a national footprint so from coast to coast their name is out there. They’re representing a firm and a model, seeking people geographically that will enhance that national footprint, that will be able to support that. Of course, there’s firms that just are also looking to be bigger because of what they can accomplish with that scale. So more assets, more offerings. We know in this space that advisors are having to do more and more, offer more and more services. Sometimes that is their goal with acquisitions is to be able to acquire those specialty capabilities and talents.”

Nikolee Turner on what excites her about the next decade:

“What absolutely excites me is just the rapid change that we are experiencing. There is so much technology available to advisory firms now that just wasn’t there before. I think that we will see a whole new way where we can optimize the client relationship and hopefully deepen that human connection while using technology to do some of the other efficiency things that we’ve talked about. I think we will see several large mega RIA firms that will have scale and geography and have a real presence. But I also think that we will continue to see new entrants. We see that today. We see thousands of firms starting up every year. So we’ll continue to see those new entrants. What I’m excited about is just how quickly advisors are starting to adopt that change. And I think we don’t even know what it’ll look like in 10 years because it’s changing so rapidly.”