Client retention following M&A

Client retention and growth is more often than not the key objective of M&A deals within the accounting and financial advisory sectors. There’s real opportunity to be gained from both client and firm perspective in presenting a more integrated approach to clients in relation to financial services.

We have seen a great deal of activity within the M&A space in recent years, particularly the acquisition of accounting firms by financial advisory groups and the tuck-in of smaller accounting firms by larger firms seeking to expand reach and volume. It’s quite surprising, in this environment, that the approach to client retention and growth tends to be focused predominantly on risk management with relatively little strategic thought given to future opportunities in the short term.

The importance of client retention cannot be underestimated.

1. Success of M&A is often measured by client retention and growth

2. The seller and buyer both want retention to maximise the value of the deal

3. So a straight sale of assets is not so relevant in advisory M&A

4. This explains why firms are so careful with client transition

There may be an expectation that all clients will be retained as part of the transition process. Where there is a perceived or real risk, then a claw-back of up to 20% of the value of fees may be considered. Inevitably, some clients choose to leave because they are unsure about the new business or simply feel they need a change, with the M&A serving as a catalyst for this action.

Following M&A, firms generally focus on minimising up front changes, especially in relation to personal relationships and fee for services. Whilst the opportunity for business development is there, there’s more of a focus initially on ‘maintaining the status quo’ with less of a focus initially on getting out to meet clients for the first time. The phrase ‘nothing will change’ certainly settles anxieties but perhaps reduces the opportunity to provide a stronger service than clients have received in the past.

With mergers or acquisitions involving financial advisory and accounting firms, issues of cultural divergence often strain the new business relationship and make it more difficult to get true value from service integration. Accountants are often reluctant to relinquish their status as ‘trusted advisor.’ They are also often reluctant to engage clients in rich conversations about their financial goals and challenges. Both groups need to work together from day one to maximise the value of transition.


Click here to download your copy of the white paper ’10 key actions for client transition following M&A’

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For Accountants

The official account of For Accountants, an online resource specifically designed for accountants in public practice.