Second post from the panel I chaired at the Global WealthTech Summit.
I asked Din Mustaffa, CFO at Evelyn Partners, where the complexity appears that was never in the deal model.
His answer was to plan for it before it arrives.
"Whenever you're planning for growth, be it organic or through M&A, you always need to build in some buffer for complexity into your model. Complexity, within this industry, will definitely show up."
Part of the reason is a regulatory environment that never stands still.
"We operate in a regulated environment that is constantly evolving. Rules on how we operate, like SM&CR. How we sell, like Consumer Duty. How products work, like the ISA allowance. How we're taxed, like CGT and IHT. You need to be right, because if you're not right, the cost of it is very expensive, either for us or for our clients."
His way of staying ahead is simple: put the client first and stay close to the regulator. He gave an example from bringing Tilney and Smith & Williamson together.
"We were merging two businesses with different types of clients, different tiers, different pricing, and we wanted to create a more scalable, more homogenised business. But the key point was making sure it was good for the customer, because they got a consistent outcome."
Jason Chapman, UK Chief Commercial Officer at Moneyfarm and CEO of Willis Owen, has done a lot of buying. His starting point is the reason for the deal.
"What's the reason you're buying the solution in the first place?"
He described Moneyfarm deals that ranged from a pure asset purchase of a robo's customers to a strategic fit with technology and a DIY and discretionary offer they didn't have. The businesses still run under their own brands. On what you take over and what you leave alone:
"You might be buying the asset strategically, but not all of the processes and tech."
And on the customers being acquired:
"They didn't put their hand up and say, please move me to Moneyfarm. So don't move their cheese too quickly. Make them feel like they're part of a larger organisation, and gradually feed in what the group can bring."
On platforms, he was blunt about how long the work takes.
"That analysis takes at least six to eighteen months of working with the individuals and understanding how they use the back office solution."
He has been through two platform migrations and would rather avoid a third. The alternative he described:
"Can you offer them from a front end layer, all the services that you do across the business, while they still trade on their own platform? I think that's the win-win."
My observation: neither described the hard part as technology. It was knowing what each acquired business actually does, and where it overlaps with yours, before deciding what to merge, replace or leave alone.
Thank you, Din and Jason.