Interesting in this light is Succession, which said in September 2013 it would acquire six firms by the end of the year, and later announced the acquisition of Clay Rogers, which was not listed among those six.
When I spoke to Simon Chamberlain today, he said that not only had the firm ended up acquiring those anticipated six firms, but is also on the verge of acquiring three more, imminently surpassing its own firm-a-month goal.
Succession is instructive here because it acquires firms in two stages: first it buys a minority stake and sets out a list of expectations. When and if a firm meets those expectations it increases its ownership to a majority stake.
Specifically it buys a 15 per cent stake in a firm and agrees to acquire a majority shareholding once the advice firm can check the 21 boxes on Succession’s list, which includes making it compatible with the rest of the would-be owner.
Mr Chamberlain said: “The easy thing is buying the companies. The hard thing is to get them to do the consolidation process after they received their cash. They aren’t motivated anymore because they have got their money.”
Maybe Mr Chamberlain is on to something here. Get the hard part done first, and keep the carrot just that much further out of reach until the firm you want to acquire has got its ducks in a line that will match your own.
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