Another one bites the dust - are you at risk of being picked off?
Updated: Jan 29, 2020
I spent 2019 watching the new wave of consolidators suck up general practice firms, and it made me wonder - how many firms sell into a consolidator out of choice?
Of course, the message from the consolidators is always that ‘bigger is better’, maximising synergies, centralising overheads/tech/admin etc. But when I analyse firms a while later after they’ve made this leap, what I invariably see is discontented staff, leadership teams & eventually an exodus of the best talent...leaving behind the more mediocre or those who don’t have the capability to make a personal move.
Most firms I know have sold to a consolidator because they felt they had no other option. Age of directors/partners, lack of succession or other exit routes, financial pressures, all lead them down this one inevitable route.
So why is the story rarely “and they lived happily ever after”?
Certainly the loss of control or decision-making abilities comes as a culture shock to many director/partners who have not exited immediately after the sale. Just as within any corporate M&A situation, being able to smoothly integrate the retained senior leaders into a new culture is of paramount importance - and I doubt much emphasis is actually placed on this whilst the enlarged firm is grappling with managing the emotions & expectations of the wider staff team and the practical tasks of introducing new systems, tech, practice management & regulatory regimes. Senior leaders are expected to still lead, whilst hiding their own personal misgivings and daily frustrations...which can usually be done for a while...by some. But often boils over eventually.
And I expect the other main issue is around identity - staff/managers not buying into the new brand, not truly being proud of working for this consolidator firm as they feel they have been swallowed up by a predator in the wider world. Their reputation locally, often built around a trusted firm name which has had a long history in their town, has to be rebuilt under the guise of this new beast, pretending still to be ‘local people advising local businesses’ but feeling deep down somewhat embarrassed, maybe, to have ‘sold out to the big boys’?
So how do you avoid these issues & stop history repeating itself?
Well the consolidators themselves have a huge responsibility to invest in the people - at all levels - when they acquire or merge. The small things, like having an instant web presence, social media support, signage, marketing resources, business cards even, are very important in the day-to-day of the whole team, to gain an immediate sense of trust & togetherness, bonding them, bringing calm to the situation. Integration in my experience though, typically seems to be patchy, at best!
For medium-sized firms now...those who are still independent - you need to consider your succession planning today. Don’t leave it for the future. It takes years, and plans go awry at regular intervals as future leaders often change their career path & scupper your ideas, so it won’t be a smooth path. Keep your options open, look 5, 10, 15 years ahead. Don’t be left with no choice when the consolidators come knocking. If you do sell, be absolutely sure you’ve made that decision with a clear head, without undue pressure, with the luxury of time to think. Make yourself future-proof!
Succession planning is included in our 12-month programme - contact me to find out more.