Why Do Some Investment Advisory Mergers Fail While Others Succeed?

BOSTON, Aug. 11, 2014 /PRNewswire/ -- The answers, with some surprising findings, can be found in a new white paper titled "Best Practices in Investment Advisory Partnerships: Ensuring Success of Mergers, Successions, and Start-Ups" based on interviews with leaders at some of the RIA industry's most successful partnerships.

The Partnership Resource has released a white paper that incorporates interviews with research on the dynamics of partnerships. The white paper brings to light the common traits of successful partners, and reveals the stories behind the successes (and a few failures.) The paper posits that defining and maintaining a cohesive culture at the firm is just as necessary for the success of your start up or merger as any other element of your deal. While focused on the investment advisory industry many of the findings are relevant in any business partnership.

The paper includes 10 "Best Practices" drawn from interviews and social science research. It explores not just what is needed: commitment, communication, complementary traits, and shared vision but how to instill each element for a winning cultural fit. The best partnerships exemplify these qualities but also maintain formal and informal systems to ensure that their relationship stays on track. One especially interesting finding was that having a preexisting social relationship was not a predictor of success. 

Participants in the study range from those whose partnership formed just a few years ago to those who have stayed together for over 30 years. The number of partners ranged from just 2 to over 40 shareholders. About a quarter (24%) of the participants were principals at market dominator firms, defined as over $1 billion AUM, with the remainder evenly divided (38%) between firms with $250 to $1 billion AUM and those with less than $250 million. The range was from under $25 million to over $7 billion in AUM.

The Partnership Resource is led by Lisette Smith and Tanya Rapacz, two former Registered Investment Advisors who have been business partners for over 10 years. Since selling their investment advisory business in 2009, they have been focused on conflict resolution and mediation between business partners. They studied conflict resolution at The Harvard Program on Negotiation.

The Partnership Resource provides mediation, facilitation, and conflict coaching services to business partnerships. For more information, contact Lisette Smith at 617.694.7755 or [email protected] or visit our website www.thepartnershipresource.com.

SOURCE The Partnership Resource