Buying an advice firm can be an effective way to grow quickly but there are a number of things that can go wrong, not least the previous owner suddenly realising what they have given up.
Milecross Financial Solutions has been on the acquisition trail for about 10 years, snapping up more than a dozen firms from within its home network the Openwork Partnership.
It has been an effective way to grow the advice business, which is run by former Openwork managers Paul Dalzell and Chris Thorndycraft, and which has grown from £150mn assets under management six years ago to £500mn now.
But it has not been without suffering "a few scars", the pair admit, as they describe their biggest learning experience from the process: getting the principal and their staff to understand the change in control that is about to occur.
"I wouldn't underestimate how difficult it is for someone who's built a business to then give up control," says Dalzell, chief executive officer at Milecross.
At best, the integration of a new business works smoothly and all staff and clients appreciate the opportunity that being part of a larger firm affords, he says.
At worst, the former owner regrets their decision, staff and clients are confused as to who is in charge of what, and clients start to leave.
Dalzell says: "That's probably one of the biggest learnings that we've had is actually getting the practice principal to understand, and the people who work with them, including the administrators, you now no longer work for this person, you're now part of this, these are our systems which we want to help you integrate.
"And if we can learn something from you in terms of how we make things more efficient, and more customer/adviser friendly we want to do that, but this is it, this is a change."
He adds: "That bond has to be slightly broken and that's very difficult."
He says to avoid sudden negative realisations Milecross makes sure it spends a significant amount of time talking to the vendor and their team to get them to understand the changes ahead before the deal is agreed.
The key is to preempt any surprises and to get people excited to be joining the new team, Dalzell says.
Intensive build up process
Milecross started in 2010 as part of the Openwork Partnership, with both Dalzell and Thorndycraft being former Openwork managers.
Dalzell was national recruitment manager at Zurich Financial Services, which created Openwork, while Thorndycraft is a former commercial director at Openwork.
Milecross started acquiring firms in 2015 and to date it has snapped up 15 businesses from within Openwork, mainly from partners wishing to retire or those wanting to continue advising but who no longer wanted to run their own business.
This has made the process a bit easier as there was a common proposition, common fund access, and similar charging structures - but there is still a fair amount of vetting needed before a deal gets to the crunch point, says Thorndycraft, chief commercial officer at Milecross.
