The real commercial value of an acquisition depends on what happens after the deal is signed.
Professional services firms often now backed by private equity, are acquiring businesses at an extraordinary rate. Law firms, accountants, consultancies and wealth management businesses are all looking to acquisitions as a route to growth. The attraction is obvious. Acquisitions can provide immediate access to new clients, additional expertise, geographical markets and talented people. But there's an important question that I suspect doesn't receive enough attention during the acquisition process.
Who's going to develop all those new client relationships?
Because buying another professional firm doesn't automatically mean you've created a successful business development engine. You've certainly created the opportunity. But somebody still needs to turn that opportunity into revenue.
The opportunity hiding in plain sight
Imagine an accounting firm with 1,000 clients acquiring another firm with 500. Suddenly, the combined business has 1,500 client relationships and a much broader range of expertise. On paper, the cross-selling opportunities could be enormous. The acquiring firm might have excellent corporate finance, wealth management and business advisory capabilities. The acquired firm might have particularly strong relationships with privately owned businesses. Surely introducing those clients to additional services should be straightforward? Unfortunately, it rarely is.
Partners are understandably protective of their client relationships. They may have spent twenty years developing them. They're not necessarily enthusiastic about introducing somebody they've only just met, particularly if they don't understand what that person does or whether they'll look after the client properly. And there's the problem.
You can acquire a client database overnight. You can't acquire trust between colleagues overnight.
Five actions I'd prioritise in the first 100 days
Having worked with professional firms on business development and cross-selling, I'd concentrate on five practical actions following an acquisition.
1. Understand the combined client base.
Start by examining the most valuable clients across both businesses. Who are they? What industries do they operate in? Which services do they currently use? Where might additional opportunities exist? Don't assume the CRM contains all the answers. Often, the most valuable information is sitting inside partners' heads. May firms CRM is little more than a spreadsheet.
2. Help partners understand their new colleagues.
Before expecting people to introduce colleagues to clients, make sure they understand each other's expertise. I'd organise short, practical sessions where partners explain the problems they solve, their ideal clients and the circumstances in which colleagues should introduce them. No lengthy presentations. Just useful commercial conversations. I have seen these sessions make such a difference yet so may firms never set aside the required time for them. I am hoping some of the time saved by AI might be dedicated to this type of activity.
3. Identify the first 20 opportunities.
Don't attempt to cross-sell everything to everybody. Identify 20 genuine opportunities where the combined firm's expertise could deliver additional value to an existing client. Then agree who will take responsibility for progressing each opportunity. Personal accountability gets you across the line. Who is doing what by when?
4. Build trust before making introductions.
Partners need confidence that their colleagues will look after their clients. Encourage joint client meetings, informal conversations and opportunities to work together. The objective isn't to force introductions. It's to create the confidence that makes them happen naturally. This requires the stakeholders to invest in quality time together, not just a celebratory dinner.
5. Measure commercial progress.
Track introductions made, client meetings held, opportunities identified and additional revenue generated. Review progress monthly. If nobody is accountable, cross-selling will quickly become another good idea that never quite happens. If you have not yet invested in a proper CRM system, now is the time.
The biggest mistake? Assuming integration is somebody else's responsibility.
Following an acquisition, considerable attention is understandably devoted to financial systems, technology, HR and operational integration. All essential but far too much focus is given to making back office cost savings rather than growing the top line. Commercial integration deserves equal attention. The Managing Partner, CEO and leadership team need to make it clear that developing the combined client base is a priority. Partners need to be encouraged and rewarded for collaboration. And the BD team needs to be involved from the beginning, not invited in six months later when the anticipated cross-selling hasn't materialised.
Buying revenue is only the beginning
I've always believed that existing clients represent one of the greatest opportunities for growth in professional services. Acquisitions can multiply those opportunities dramatically. But only if firms invest the time and effort required to develop relationships, build trust and identify genuine client needs. The real value of an acquisition isn't simply the revenue you've purchased. It's the additional revenue you can generate by bringing two businesses together. And that won't happen simply because the deal has been signed. I see many private equity deals where parties fall out over valuations before they even make the integration of clients fully happen.
It requires a plan, committed partners and somebody taking responsibility for making it happen. So, if your firm has recently completed an acquisition, here's my question: You've integrated the businesses. But have you integrated the relationships? If you need help, be sure to ask.