How accountancy firms can grow quickly through mergers and acquisitions

There’s currently a lot of excitement around mergers and acquisitions in the UK accountancy sector.

How so? For many, this activity can quickly boost a firm’s market presence, client base, and capabilities.

M&A makes a lot of sense if you can access the funds. Why spend time struggling to get into a niche when you can bring a specialised company – purpose-built – into your fold?

Everyone wins. An acquired firm has a secure home that helps its standing in the market. A buyer gets new resources such as people, premises, and other infrastructure.

Rather than playing a long game when it comes to growth, you might find yourself outpacing competitors overnight.

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Being prepared to grow: the challenges mergers and acquisitions  face

Of course, it is not all plain sailing. With big deals come a fair share of potential headaches. It’s important to be aware of this when heading into your first merger or acquisition.

Here are a few examples:

Employee and client retention: The firm you buy will experience some level of disruption to its stakeholders. Expect some apprehension in the face of change. The result is that some of your new staff, and their clients, might consider going elsewhere.

All the leadership skills your top team has will be put to the test. They must do all in their power to oversee a smooth transition and protect valuable relationships.

Integration issues: Even with your staff and clients happily on board, the work is just beginning. Bringing workflows and cultures together under one proverbial “roof” can be difficult. The plans you had in mind at the outset of a merger might have to change, so stay open-minded and pragmatic.

Technology trouble: So, your new staff, clients and integrated workflows are all looked after. What now?  It’s important to make sure software isn’t an issue. It can be a serious problem if your new firm’s software is outdated or doesn’t sync with your own.  

Good matchmaking: three things to consider when acquiring a business

What do you need to think about before embarking on a merger or acquisition?

One: What areas does the firm you’re seeking to acquire work in?

It’s tempting to buy any good firm, but are they the right fit?

Think about the target firm’s specialisation and client base.

For example, a similar or complementary client base can improve market reach and provide opportunities to cross-sell services. Conversely, anything too tangential might confuse your market and be difficult to manage internally.

Two: Due diligence – put in extra time

You know the devil is in the details. You don’t need us to tell you that – but in the excitement of a deal, it’s always important to remind yourself of this.

The more excited you are about a merger or acquisition, the more you will want to double down on your due diligence. Carefully review financial statements, look at revenue streams and evaluate the firm’s financial stability.  

Three: An integration plan for the two firms

It’s important to discuss with the two businesses how best to bring them together. While hearts and minds are essential, so is remembering any legal obligations, such as TUPE in the UK.

Comms play an important role. Make sure all staff are fully informed about any processes and milestones they need to know about. Explain how the merger or acquisition will affect them, and also where nothing will change.

You may need to think about taking a similar approach with clients. As we mentioned earlier, change beings a measure of apprehension. With clients, this might be about service quality dropping. It could also be that they don’t want to lose touch with trusted accountants in the acquired firm. One rule of thumb might be to announce it as good news, but remain realistic. If it isn’t going to be “business as usual” then don’t promise that. Make sure they are well aware of any big changes (such as moving offices) as well as small ones (like new email addresses).

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The next step – our FREE guide to growth

We have the perfect guide if you are looking to grow.

It explores all your options, whether you’re considering mergers, acquisitions or breaking into new markets.

It will look at both and help you decide which is the best way forward for your firm.

What is in the guide?

Think of it as a comprehensive start to your growth journey, looking at mission-critical areas like:

• The key characteristics of organic and inorganic growth
• The challenges both bring
• Strategies for encouraging organic growth
• Considerations for purchasing a business
• How to integrate complex systems during a merger
• An overview of solutions that may assist your growth journey

So click the link and download your FREE guide today.