Meet your match as an RIA: How to find M&A prospects with the right outreach strategy

Finding the right M&A partner starts with an outreach strategy grounded in your firm's vision, value proposition, and ideal target.

You like people. People like you. But making a personal connection is only one small part of M&A. In fact, focusing too much on chemistry can lead you to overlook some of your most promising partners.

Connecting with the right advisor or firm requires a detailed, well-orchestrated approach, one that's connected to your value proposition and vision. In part one, we covered the strategic thinking behind pursuing M&A. In part two, we focused on preparation. Now it's time to put it all together and to use all your prework to fuel potential connections.

Gather your resources

Pursuing M&A requires more time, budget, and coordination than most firms expect. Plan for those demands early so your team isn't scrambling when opportunities begin to move forward.

"I would say, on average, we have 100 conversations going, in various stages, at any time. And there's probably 25 out of those 100 that have the potential to work," says Peter Mallouk, President and CEO of Creative Planning.  

No matter how you approach it, M&A will take more resources than your day-to-day. Consider budgeting for consultants, employee time, incentives to help your team make this big push, and new outreach methods. 

Look for partners

Identifying the right M&A partners starts with defining your ideal target and using multiple outreach channels to connect with them. Like prospecting for clients, you need to know who you're trying to reach and where to find them. For M&A, this means getting clear on who your ideal partner is and the best ways to reach them. You also need a timeline and to decide whether you're looking to make one or several deals in the coming years.

To start your prospect list, think about reaching out in a few different ways.

• Cold outreach: Find prospects via LinkedIn, RIA databases such as Discovery Data, and individual websites.
• Warm introductions: Centers of influence such as accountants and attorneys may know of a firm that's interested in buying, merging, or selling.
• Industry engagement: Industry events such as IMPACT, Schwab's annual advisor conference, can be a great way to meet people and spread the word about your interest in M&A.
• Third-party assistance: Investment bankers and M&A consultants often specialize in connecting partners and facilitating early relationship building.
• Schwab's RIAConnect^®: Advisors who custody with Schwab have access to an online community and matching program that makes forming strategic relationships easier. 

Craft authentic stories

Clear, authentic storytelling can help your firm stand out and attract M&A partners who align with your goals. In part one of this series, we talked about identifying your ideal partner and developing a value proposition that articulates why firms should want to partner with you. Now it's time to turn those ideas into stories that appeal to potential partners.

As you build your firm's story library, focus on a few essentials:

• Create excitement. Understand what your ideal partner wants and communicate that you can help them get it.
• Build emotional connections. Your firm's people and values help your partner feel invested in what you're trying to achieve.
• Include important details: Highlight what's most important through specific moments and details that will be meaningful to prospective partners.

Many firms version their stories for different audiences. Here are a few types of stories to consider creating for your firm.

• Introduction: A brief but interesting picture of the firm.
• Origin: A story about the firm's beginnings and history that communicates core ideas and values.
• Financial: A snapshot of your financial strength and the challenges you're ready to solve.
• Philosophy: Why it's important to be an RIA and where your values come from.
• Success stories: Past deals that may illustrate how you aligned with firms on an agreement.

These stories have the most impact when everyone on staff can tell them without missing the point or leaving out critical details. Many firms socialize their stories and even devote training time to helping people learn the firm's stories.

How do you assess cultural fit?

Cultural fit is more than a feeling. You need to look closely at a potential partner's core values, decision-making processes, leadership style, and approach to client service. If their culture is like yours or complements what you do, you may have a fit.

"For us, it's really very, very simple: it's culture. The culture of the organization has to be similar to our culture. If it's drastically different, we're not forcing a square peg into a round hole. It just doesn't make sense."

Rick Buoncore
Managing Partner
MAI Capital Management

Develop a communications strategy

A communications strategy turns your firm's story into outreach materials and tactics that consistently engage potential partners. From there, the goal is to decide which materials you need, how they'll be used, and where they can support early conversations.

Elements of your strategy may include:

• Sharpening your elevator pitch specifically for what matters to your ideal partner.
• Developing a one- or two-page summary sheet that outlines your firm's value and what you want in a match.
• Crafting a pitchbook for presentations.
• Building a microsite specifically for M&A partners.
• Developing an interview guide to help you get what you need from early conversations.
• For buyers, running social media or email campaigns may also be used to attract sellers.

You'll also need to think about when and how often to put your materials out there. A cadence for each deliverable can help you make sure you stay active and consistent (but not overwhelming) in your outreach.

Don't rush the process

Successful M&A outcomes require patience, discipline, and a commitment to finding the right fit—not just the fastest deal. Your first M&A deal could be one of the most important moves you ever make. As you research firms and meet people, stay true to your vision. You've done the work to define success. Now's the time to see it through.

For a deeper dive into making M&A connections, read an excerpt from our M&A action guide, "Activating Your M&A Strategy." 

What you can do next

• Learn more about how M&A can support your growth. Check out an excerpt from our action guide, "Activating Your M&A Strategy." If you're a Schwab client, log in for the complete guide.
• Have questions about M&A or just want to know more about how Schwab supports RIAs? Let's talk about it. Our experienced team is ready to help you think through options and opportunities. Let's talk.