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The challenges of buying an advice business

Ben-Clarke

In July 2012, Wingate acquired Francis Townsend & Hayward (Financial Services) Limited (FTH), with the intention of migrating clients and staff to Caterham and closing their Croydon office.

Three years later, the integration has been successful, but we have learnt a lot and had our fair share of problems.

FTH were a high quality advisory practice with two principals. One of the owner managers ran the business, effectively mirroring my “managing director” role, but they also had client-facing and fee-earning responsibility.

A shared objective was to increase the time he had to spend with clients, while improving efficiencies across the merged business.

The FTH clients were offered an enhanced service proposition, principally cash flow led, with a consistent investment proposition with oversight by Wingate’s investment committee.

We were, however, not prescriptive: clients could retain existing plans, platforms and investments if they preferred. They also retained continuity with their FTH adviser.

In almost all cases, clients elected for the enhanced service commitments, reduced initial costs and more frequent contact that typically came with Wingate’s service offering. It was very important to both FTH and Wingate that we didn’t impose a new set of views upon individuals who had been clients of FTH for many years.

All the FTH staff were retained and three years later, many hold key roles within Wingate covering paraplanning, office management and of course financial planning.

We have also retained one key individual who moved to the South coast and now principally works remotely using our ‘cloud’ IT system. We recruited a replacement for an administrative member of FTH staff who retired and within eighteen months had accommodated the near total retirement of one of the principals and advisers.

The two owners received the full consideration, which was calculated using a simple but competitive formula. As we have no third party creditors and no external debt, we decided to pay the final deferred payment ahead of the agreed schedule, by mutual agreement.

The principal hurdles we had to overcome were around people. We did not anticipate the impact to our existing personnel of bringing in the additional staff or the change of environment for the FTH team who had to adapt to an open-plan office from having segregated rooms.

Excess noise (and also “excess quiet”) was a frequent complaint: one person’s cheerful chat can be another’s raucous distraction. Conversely some said the office could frequently feel like a library!

You always should learn from previous experience and if we were to do a similar deal again we would stick more closely to our initial plan; for fear of upsetting staff we may have moved too slowly in implementing change.

We probably retained the FTH brand for longer than was necessary and perhaps helpful for all parties. In an acquisition, your new and existing colleagues care most about their future and, in particular, the continuity of their role. Providing these assurances and then progressing with necessary change rapidly is a prudent thing to do. Sometimes moving too slow can undermine security rather than enforce it.

We still have work to do on our management information and back office and some of the FTH advisers still have too many clients to be able to offer the full high touch ‘Wingate service’. For this reason, it is probably another 12 months until we would say the final integration is complete.

We are, however, now in a position to make a further acquisition – ideally another high quality firm with annual turnover of around £1m with three to five advisers.

Ben Clarke is managing director at Wingate

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