Today’s changing landscape provides a fertile ground for quality wealth management practices to strategically growth and strengthen their businesses through succession and growth strategies. The question to ask are when is the best time to do this and how do you go about it?
We all recognise the importance of seeking professional advice from financial planners and accountants in order to achieve our long term financial goals. For the same reasons, it is just as important for businesses to seek advice from experts when planning their long term goals and financial position. The case study below highlights the importance of taking your time, undertaking in-depth research and establishing a true understanding of your goals and agendas when implementing these strategies into your business.
Earlier this month, DKN Financial Group Limited (DKN) formed an equity partnership with StrategyOne Advice Network (StrategyOne), a Sydney based wealth management practice authorised with Lonsdale Financial Group (LFG). StrategyOne is the recent merger of two financial planning businesses founded by Virgina Heyer and Venn O’Neill who had previously operated as Authorised Representatives of Godfrey Pembroke. DKN took a 25% stake in StrategyOne.
The final decision to partner with DKN was the outcome of an exhaustive 18-month process of consultation with some of the industry’s most respected consultants for Heyer and O’Neill. When they first started looking into their individual long-term growth opportunities, the concept of merging their businesses wasn’t part of the plan. Both businesses were exploring the idea of an equity partnership for very different reasons – and after six months of ‘going around in circles’ decided to call in experts.
Anthony Hunt and Wayne Wilson from Hunt’s Group Consulting spent two days asking challenging questions about Heyer and O’Neill’s long term goals for their businesses, their current structure, revenue and cost drivers, and current and prospective service offerings.
The outcome from these discussions, along with in-depth research into each business and corresponding market analysis, revealed that Heyer and O’Neill’s aspirations were very much aligned and were not going to be met in their current business structures. Instead, they would benefit from merging their businesses.
These discussions also revealed a need to refine their operating systems, licensing, software and platform operations in order to strengthen their position and their offering for clients. The benefits of scale when merging their businesses would assist them to access the best value from these solutions.
Once StrateyOne was formed, the next step was to determine what they wanted and needed from an equity partner. After doing the due diligence and asking the right questions, it soon became apparent that a number of offers just weren’t appropriate. It’s not just about the money – you need a range of criteria to select the right partner.
Hunt’s Group worked with StrategyOne to create a questionnaire with more than 200 questions that had been weighted according to priorities specified by StrategyOne. Once StrategyOne was ready to go to market – and importantly, knew what they were looking for in a partner – the search began. Approximately 30 potential equity partners were approached and those who put forward a proposal were assessed on a combination of their financial offer and strategic alignment as reflected by the responses made to the questions asked.
DKN and its subsidiary LFG was recognised as the best fit as it provides a complete holistic solution, including a quality and cost effective platform solution, licensing and compliance solution and an established business management team to assist StrategyOne enhance and implement their business strategies in both the short and longer term.
Their approach as a minority stakeholder provided the flexibility for StrategyOne to maintain its own business model and brand. O’Neill commented, “This alignment provided us not only the position to continue our long term growth, it has also created access to a broad range of solutions that have increased efficiencies in our business and the amount of time we can now spend focusing on our clients.”
“The key learning to come from this process is to engage an expert earlier! It’s about recognising your own skill set and accepting when you need expert help. The process also reminded us of the importance of aligning with the right service providers so the overall service we provide to our clients is higher, more effective and cost efficient.”
Wayne Wilson suggests that partnerships such as this illustrate the pattern of things to come. “There is definitely a quantum shift in scale dynamics if financial services in Australia. Those who are well prepared and well positioned will be the ones to come out ahead in the long run.”