Establishing your business and proving to your employees and customers that you can take it to great heights is one thing, but how do you convince the employees and customers of a business that you have acquired?
Alexander Laureti, a partner of tax and accounting firm LMS Advisory, explains that his business has faced this problem several times over the years.
“Our first practice acquisition happened back in 2011,” he says.
Back then, LMS Advisory had to either cut off some aspects of the business to maintain profitability, or grow its client base. Alexander chose the latter, and did so through acquisition.
“We made the decision to go out there and to acquire another practice, to basically use the capacity and the resources we already had to service more people,” he says.
It was not as easy as just jumping in and taking over everything, however.
“That was a really eye-opening experience for us, because in taking over somebody else's business, you're inserting yourself into a position that was already the trusted adviser,” says Alexander.
“You're basically having to earn your stripes very quickly, because you have now taken over that relationship.
“Somebody has very quickly exited, and a lot of people don't necessarily understand why.
“It's a big cultural difference because you're meeting a whole bunch of people that you don't have that history with. When you're starting from scratch, you really are basically convincing people and giving them comfort that even though things might be a little bit different, for them everything will stay the same.”
Alexander explains that some customers will not like the idea of another business acquiring the one they currently deal with, and this is a reality that can't be avoided – which should be factored into your acquisition and integration plans.
“As soon as an accountant changed over, you do hear from some [clients] saying, 'I was thinking of going anyway for years, I just never had the opportunity'. By the same token, you'll meet some clients who were in there who just love the fact that 'I never really got to see my accountant beforehand because he was so busy',” he says.
Since 2011 LMS Advisory has made multiple acquisitions, each with its own set of challenges. Alexander notes that all prospective business purchasers should look out for outstanding debt.
“If it's a larger acquisition, there is a debt component,” he says.
“That's something that needs to be carefully looked at as well because you're going into a relationship where you're purchasing what we call a parcel of fees.”
Hear more insights from Alexander about the challenges and benefits of expansion through acquisition, as well as his approach to selling in an industry not traditionally associated with sales, on the My Business Podcast now!