08 November 2018

Technology: The differentiator for merger and acquisition success

By Steve Leivent

Mergers and acquisitions (M&A) as a growth strategy is becoming increasingly popular. In fact, a recent wealthmanagement.com survey reported that within the next two years, nearly one in four advisors anticipates being a part of either a merger or acquisition.

When firms start to think about M&A strategy, client experience is often a key concern at the forefront. When a selling firm delivers a superior customer experience, buyers take notice. The reason? It’s all about the infrastructure. When a selling firm has a client-focused tech stack that supports a smooth and seamless transition, it’s a highly attractive factor to buyers. “Making the deal is the easy part,” says Bill Sowell, CEO of Sowell Management Services, a Chicago-based RIA firm offering investment strategies and turnkey back-office solutions to financial advisors. “A successful transition is where the rubber meets the road, and that’s truly where the right technology makes the difference.”

Another area where infrastructure is seen as a critical factor in M&A success is how it plays into operational efficiency. According to the wealthmanagement.com survey, 98 percent of respondents say having an efficient and scalable back office is very or extremely important when integrating firms. Things like workflow automation, document management, client communications, electronic signatures and compliance tools were all revealed as top technologies advisors desire during a merger or acquisition. “Our experience shows that the valuations of our acquisitions are immediately higher after implementing our technology because of the highly respected and industry-recognized technology we utilize,” Sowell says. “That technology, coupled with the efficiency of integrating our technology partners into a seamless technology platform, allows for greater efficiencies in our pre- and post-transition processing.”

The Black Diamond Wealth Platform team recently researched opportunities and challenges within the M&A space. “We’ve found that advisors who are looking to grow through acquisitions are very interested in the Black Diamond Wealth Platform as part of that story,” says Bob Conchiglia, Vice President of Advisory Sales for SS&C Advent. “Advisors have found, and sometimes the hard way, that a modern technology stack is truly a differentiator in M&A conversations.” And with M&A activity showing no signs of slowing down, having the right technology in place now will give you the upper hand, no matter which side of the deal you sit on.

To learn more, read the whitepaper.