Numerous successful acquisitions of client books in the past 12 months have been made directly between experienced buyers and vendors without the help of an intermediary, the Commonwealth Bank of Australia’s Financial Planning Banking (CBA FPB) team has reported.
“Roughly 90 per cent of successful transactions made by these CBA FPB clients were the result of the buyer having established a relationship with the vendor prior to the client book being put on the market,” CBA FPB market development executive Ian Anderson told InvestorDaily.
Rather than seeking a vendor through the help of a buyer advocate, business broker or dealer group representative, where competition was often a lot more fierce among buyers, experienced and successful acquirers were in CBA FPB’s experience taking a more proactive approach.
“What our clients who are more familiar with the acquisition process are doing is developing relationships with practices within the same geographical area rather than necessarily treating them like competitors,” Anderson said.
“They research all the publicly available information on those firms, narrow down the list to include the ones that have the best cultural alignment with their own practice and then seek a meeting with the relevant principals.”
Buyers can then assess mutual benefits, such as acquisition and merger purposes, and establish direct relationships with potential vendors over time.
“We’re noticing that experienced buyers and selected vendors that do this are often able to bring their deal to the table a lot quicker, and in instances where a principal may be exiting the business over time, that both businesses can work together to improve profitability and reduce costs before the transaction even goes ahead,” Anderson said.
“We’re finding that in the case of experienced buyers that third parties are being consulted less about acquisition opportunities and more about the negotiation of prices and the terms and conditions.”
CBA Financial Planning Banking services 17 CBA-accredited dealer groups.
