A Focus on Reputation and Client Trust for Acquisition Success

Whole Foods has been a bastion of the organic movement since its founding in 1980. Urbanites flocked to pay top dollar for picture-perfect produce, wines curated by professional wine stewards, and abundant organic, non-GMO options to suit any number of nutritional requirements. However, competition eventually flooded the market. Enter Amazon. The online retail giant acquired Whole Foods in a $13.7B deal that left consumers eager to see price reductions, but concerned that the brand that they have come to trust would suffer for the sake of supply chain efficiency.

As a brand, Whole Foods became synonymous with healthy living, quality, and friendly customer service. How the acquisition will impact brand reputation and consumer trust is yet to be seen. Indeed, this is a concern of every entity when considering a merger or acquisition.  In the financial services arena, a strong reputation and client trust is hard won over many years of dedication and commitment to a fine-tuned value proposition.  Large or small, the success of a merger or acquisition depends on protecting the relationship capital of the business.

The financial services industry is built upon reputation and the trusting relationships between advisors and their clients--indeed, the client relationship is typically the very asset being acquired. A merger or acquisition introduces a third party into the scenario and how that introduction is managed will impact the quality of the client relationship through the change. Timing and tone are essential; ensuring that clients feel neither blindsided or slighted is critical to how the new party will be received. Openly communicating with clients about an imminent merger or acquisition will give them time to assimilate the news, ask questions, voice concerns, and ultimately, grow comfortable with an assurance of a seamless transition.

Safeguarding client trust is a shared responsibility between parties and will improve retention in a transition. Advisors do well not to underestimate or neglect the trust clients have placed in them. In an acquisition scenario, the seller's obligation begins with finding the best buyer candidate to care for the clients' needs.  Once a deal is struck with an ideal buyer, the work begins to formulate a practical transition strategy and to notify clients appropriately.

Clear communication and a degree of transparency can go a long way to recommend your chosen successor or merger partner. As part of a transition plan, we recommend a joint phone call, meeting, or meet n' greet event with clients to establish a relationship with the new team. By formally endorsing them, an advisor exhibits confidence in the new partners, eliciting trust by association.

To the incoming professionals, maintaining the same standard of client service is critical. In fact, a merger or acquisition is the perfect opportunity to improve the quality of service, thus encouraging clients to adopt change. Openly communicate to clients what they can expect during the transition phase, especially if significant change to the status quo is part of the plan, and be sure to adhere to the commitment. Appreciate that this period is a chance to cement relationships now that will deepen into trusting multi-generational alliances.

Whether a multi-billion-dollar acquisition or one of a more modest size, a successful transition strategy aims to protect the client relationships and established reputation of the entity. Any concerns or doubts harbored by clients can be allayed with open communication and clear messaging throughout the change. Maintaining or improving upon the client experience will also lend to reducing potential client loss. No merger or acquisition is successful without a solid strategy; advisors do well to formulate and adhere to a plan that prioritizes clients’ needs and safeguards their trust.