Q&A on M&A: What Successful Buyers Get Right

The decision to enter the M&A process as a buyer includes an examination of your firm’s strengths, weaknesses, and key performance indicators. It also includes professional support for legal work, business development, and valuation.

And even more importantly, your decision to be a buyer needs to be based on your goals and values.

James Fisher is the VP of Mergers & Acquisitions at FP Transitions, and his team has helped countless buyers successfully navigate the M&A space. We spoke with him about how buyers can position themselves for success.

Q: What are common missteps you see businesses making in the acquisition process? 

JF: I see firms getting caught up in the M&A frenzy—a "fear of missing out"—and that's not the right reason. You need to understand the desired outcome. Are you seeking inorganic growth for market share or expanding into new markets? Some businesses use a hybrid approach, building organically in existing markets, then using M&A to expand into new ones. There is also a huge demand for talent; some buyers pay a premium for firms with strong teams.

Q: What is the number one quality you see in a successful buyer? 

JF: They are prepared. They have a well-defined plan and don't deviate from it regardless of how attractive an opportunity looks. You must be patient. M&A is not a "set it and forget it" strategy. Sellers are often selling their identity—their life's work—so it’s an emotional time. You must also be flexible. While most deals follow a similar structure, each is nuanced. The market is too competitive for buyers to be rigid.

Q: Matchmaking is a critical part of FP's M&A process. How does that work? 

JF: Finding the right match starts with submitting an inquiry to us. We compile inquiries after a week and send them to the seller. There is no prize for being first, so we recommend buyers spend time crafting a good message. We see approximately 75 inquiries, and from that number, a seller usually selects six or seven firms for introductory calls. They typically narrow it down to three to five finalists, who then present non-binding Letters of Intent (LOIs) or term sheets. We don't use an "auction house" style. You should put your best foot forward because you may not get a second chance to counter.

Q: What makes a good inquiry message?

JF: Your inquiry message is your first introduction. It shouldn't be a novel, but it should be polished. Don't use a "canned" message. I see many buyers excluded because of spelling and grammar errors. You should start with a brief introduction, the reason for your inquiry, and your M&A experience. Address specific criteria, like whether you have a CFP (Certified Financial Planner) designation or will retain staff. Unsatisfactory messages include just a link to a website or "guaranteeing the highest multiples" without stating what they are.

Q: How can a buyer make the most of the introductory call?

JF: This is the most important interaction. Sellers often know within the first 10 minutes if they are interested. Be prepared. Don't be distracted—don't drive or answer emails during the call. I say this because I see it happen regularly. Don't dominate the conversation. If a seller asks about investment philosophy, don't spend 30 minutes on model portfolios. Also, don't lead with deal terms; focus on fit and synergies. Also, do not contact the seller directly after the call without permission.

Q: How do buyers navigate the transaction phase? 

JF: Once an LOI is accepted, you need a detailed integration plan. If you need bank financing, start immediately—it can take three months. Due diligence is a two-way street; the seller will also want to look "under the hood" of your practice. Most deals use a two-stage closing: signing the Asset Purchase Agreement (APA) and then seeking client consent.

Q: When the deal is done, is that basically the end of the road? 

JF: No, this starts the transition phase, and this is arguably the most important step: onboarding the clients and the new team. Once the deal is done, it's time for the hard work of making the transition a success.

Q: Are there any overall challenges buyers should keep an eye out for?

JF: Deal fatigue. It is real, and it can derail a transaction. It usually occurs if the time between the LOI and the APA exceeds three months. Don't use the legal drafting stage to renegotiate terms that were already agreed upon—that leads to frustration. The cure is to have a dedicated point person for the transaction. Set reasonable goals [e.g., gathering three years of P&Ls (Profit and Loss statements) within a week].

We recommend weekly meetings between buyer and seller, even if you think there is nothing to talk about. Finally, employ a skilled facilitator like FP Transitions to make quick work of hurdles. With the right firm by your side, the unexpected becomes easily navigable.

Find out more about Mergers and Acquisitions support with FP Transitions.