The end of 2022 marked the 10th consecutive year of record deal growth, which is a sign of a healthy environment for advisors. But a merger or acquisition with another firm comes with emotional strings attached that can sometimes endanger a potential deal.
Before shutting its doors in 2002, Robertson Stephens was one of the most active investment banks in the technology space. After reopening as a wealth advisory firm in 2013 and then closing again in 2017, the firm reopened under new management in 2018. Over the last five years, Robertson has grown from two advisory teams to 16, and from $450 million in AUM at its inception to more than $4 billion. Eight of its 16 advisor teams have been added in the last two years as the company ramped up M&A.
Raj Bhattacharyya, CEO of Robertson Stephens, talked with RIA Intel about how the firm goes about integrating new RIAs. Responses have been edited for length and clarity.
Why is there so much focus on M&A in your business model?
We have a focus on both organic and inorganic growth, and we look for advisor teams that believe in a high-quality client experience. That means a great investment process, comprehensive wealth planning, innovative use of technology, strong fiduciary relationships, and a focus on growth. We do mergers only when we believe that one plus one is greater than two.
In some cases, we’ll do a deal to add expertise within the firm. For example, in the past few years we’ve added advisor teams that bring a lot to the table in the way of impact investing, retirement consultant planning, and divorce planning.
How do you go about integrating firms that have a separate identity and culture into Robertson Stephens?
We only merge with teams with whom we share a philosophy and partnership culture. All our senior executives and advisors are equity holders in the company, and that’s a major driver of how we interact. We are generating tremendous equity value in this company, and we want all the people who to join us to share in that.
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In addition, all of our teams spend a lot of time with our new partners. We get a feel for each other on a personal basis, but also an understanding of what we all believe makes for an ideal client experience. After the deal is completed, there is a prolonged integration process where we continue to determine how they can leverage all the things we’re offering, and [how] we can take advantage of what they’re doing. It’s an intensive process, but it’s thoughtful and deliberate.
How long does the process take?
The official integration between the time we agree to a deal to the time we close is anywhere from a few weeks to a few months. The post-deal integration lasts from three to nine months, and in some ways it’s ongoing with the aim of a more perfect union.
When a firm joins Robertson Stevens, it takes on the identity of Robertson Stephens, correct? They’re not keeping their firm name, logo, e-mail, etc.
It’s the best of both worlds. They operate as Robertson Stephens, and yes, their e-mail changes, but they’re the same people, and over time they incorporate some things from us that they find useful. They use our marketing team to help grow their business, and we take over some heavy lifts — compliance, marketing, billing, and so forth. We also integrate technology. From an investment and planning perspective, it is very much advisor-led. They decide how much of what we do they want to incorporate, and over what length of time.
What are firms typically looking for from Robertson Stephens?
Prospective advisors fall under three categories: grow me, monetize me, or support me — and most have aspects of all three. They want to grow, but they’ve reached the limit of how they can do so on their own. They need more support because their resources are limited. In some of our bigger markets, we have built-in succession among our advisors who are looking to grow, but we’re not in the business of simply monetizing people and bringing in our own successors. That said, most people who have joined us to date have wanted to continue working for a long time, in part because of our partnership culture and equity culture.
What are the most difficult aspects of integration?
Technology and data transfer takes time, but I think the hardest part is the emotional aspect. This is a probably one of the most important financial decisions they’ll ever make, and I personally have a lot of conversations with people to make certain they’re emotionally prepared to be part of something bigger, something that they will help shape and influence. Once you’ve conquered the emotional, everything else is time, effort — and a 275-point checklist that we go through.
What is your advice to companies going through an M&A with a larger firm?
Make sure you’re emotionally prepared to sell something you spent most of your life building. Beyond that, there are a lot of great acquiring firms out there, each with its own philosophy, people, and personalities. Align your philosophy of client experience and your overall goals with anyone seeking to acquire you. Finally — and this seems so obvious but is often overlooked in business deals — be sure you get along with the people. They are going to be your new colleagues, and that’s very important. It’s never only about the numbers or the process. In the end, it’s much more about how you see yourself going forward in unison with the people you choose.