How accounting firms can grow quickly through mergers and…

There is currently a lot of excitement surrounding mergers and acquisitions in the UK accountancy sector.

How could that be? For many, these activities can quickly increase a company’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 fit into a niche market when you can bring a niche – purpose-built – company into your fold?

Everyone wins. The acquired company has a secure home which helps its position in the market. Buyers gain new resources such as people, places, and other infrastructure.

Rather than dragging your feet on growth, you may find yourself outpacing your competitors overnight.

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Preparing for growth: challenges facing mergers and acquisitions

Of course, not everything went smoothly. With big deals, there are a lot of potential headaches. It’s important to be aware of this when entering your first merger or acquisition.

Here are some examples:

Employee and client retention: The company 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, may consider moving elsewhere.

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

Integration issues: Even with your staff and clients happy on board, the work has only just begun. Bringing workflows and culture together under one “roof” can be difficult. The plans you had in mind at the start of the merger may have to change, so keep an open mind and be pragmatic.

Technology issues: So, your new staff, clients, and integrated workflows are all taken care of. How about now? It’s important to make sure the software isn’t the problem. This can be a serious problem if your new company’s software is outdated or out of sync with your software.

Good matchmaking: three things to consider when acquiring a business

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

One: What field does the company you want to acquire work in?

Very tempting to buy every good company, but is it a good fit?

Think about the target company’s specialization and client base.

For example, a similar or complementary client base can increase market reach and provide opportunities to cross-sell services. On the other hand, anything too tangential can confuse your market and be difficult to manage internally.

Two: Due diligence – allow extra time

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

The more excited you are about pursuing a merger or acquisition, the more you’ll want to double down on your due diligence. Review financial statements carefully, look at revenue streams, and evaluate the company’s financial stability.

Three: Integration plans for both companies

It is important to discuss with both businesses the best way to bring them together. While hearts and minds are important, remembering any legal obligations is also important, such as TUPE in the UK.

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

You may want to consider taking a similar approach with clients. As we mentioned before, changing creatures is a measure of concern. For clients, this may mean a reduction in service quality. It could also be that they don’t want to lose contact with trusted accountants in the acquired company. One rule of thumb is to announce it as good news, but keep it realistic. If it isn’t going to be “business as usual” then don’t promise it. Make sure they’re aware of big changes (like moving offices) as well as small changes (like a new email address).

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Next step – our FREE guide to growth

We have the perfect guide if you want to grow.

It explores all your options, whether you are considering a merger, acquisition, or entering a new market.

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

What’s in this guide?

Think of it as a comprehensive start to your growth journey, considering important areas such as:

• The main characteristics of organic and inorganic growth
• The challenges that both bring
• Strategies to drive organic growth
• Consider buying a business
• How to integrate complex systems during a merger
• An overview of solutions that can help you on your growth journey

So click the link and download your FREE guide today.