Ryan and I both worked for two of the largest and most prolific wealth management acquirers in the country. Through that experience, we’ve worked with just about every investment bank in our industry. When we were on the buy-side, the most challenging questions we would get asked by a potential seller were “should I hire an investment banker? Who do you recommend?” As we evaluated the existing sell-side advisors in our industry, pinpointing the perfect recommendation for the founder proved difficult. Then, the answer became clear. The best choice is right here – it should be us. We both left the buy-side to build a sell-side advisory firm to address the challenges we saw with the existing options in our industry.
The traditional investment banking approach to M&A often overlooks the human element, leading to significant challenges that can undermine the success of these transactions, or worse, lead to seller’s remorse. In this blog, we will delve into the problems associated with conventional M&A processes and explore how we built Hue focused on humanizing M&A, emphasizing the importance of relationships and client-centricity.
In the world of traditional investment banking, clients are often treated as mere numbers or transactions. This lack of personalization can create a disconnect between the investment bank and the founder. We were regularly disappointed on the buy side by the cookie-cutter confidential information memorandums we would get from traditional investment banks. While “on-brand” for the investment bank, it created a standardized template for a founder’s once-in-a-lifetime go to market opportunity.
When investment banks fail to understand the unique needs, goals, and values of the founder, they risk delivering solutions that do not align with client expectations. Moreover, founders today are looking for customized solutions that reflect their individual circumstances and aspirations. A cookie-cutter approach to M&A can result in missed opportunities to create value for founders, ultimately impacting the outcome.
Effective communication is critical in any M&A process, yet traditional investment banking often relies on formal and transactional communication styles. This can create barriers between the investment bank and the founder, leading to misunderstandings and a lack of trust. Founders may feel overwhelmed by jargon and technical purchase agreement language, making it difficult for them to confidently navigate the terms of the transaction. When the print gets small in the purchase agreement, it can get overwhelming.
Furthermore, communication during traditional investment banking processes can be sporadic, with clients left in the dark about key developments. Through our experience on the buy side, we have the unique perspective of where processes go side-ways when communication falls apart.
While financial performance is undoubtedly critical in M&A, an excessive focus on numbers can overshadow the importance of relationships and client experiences. Often, traditional investment banking prioritizes financial metrics and headline numbers, leading to decisions that may not fully consider the long-term implications. Deal structures have become far more sophisticated and the fine print behind the hurdles to achieve the various multiples matter. The headline numbers don’t matter if the founder cannot feasibly achieve it.
Traditional investment banks are wired to prioritize receiving offers over spending the time for a founder to build a relationship with the potential buyer. Wealth management is inherently relational, and thus connection drives real value in transactions. By losing sight of this element, traditional investment banking processes can compromise outcomes. What buyer can effectively advocate for increasing the transaction valuation for a seller when they have to admit that they have only spent a very limited amount of time with that founder? Creating space for relationship building is vital in the wealth management transaction journey.
All of these observations created an opportunity for Hue Partners to do things differently. Hue Partners is on a mission to reinvent investment banking. By humanizing M&A advice we can help founders achieve the best outcome for their once in a lifetime event.
At Hue Partners, we prioritize personalized engagement with wealth management founders looking to sell. By investing time to understand each founder’s unique goals, values, and motivations, we tailor our M&A strategies to align with their aspirations. This individualized approach results in a collaborative environment that drives better outcomes throughout the transaction.
Effective communication is essential in the M&A process. Hue Partners emphasizes transparency, vulnerability and open dialogue with founders, helping to alleviate concerns and build confidence. By providing regular updates and ensuring our team is accessible for questions, we keep founders informed and supported. This proactive communication strategy leads to smoother negotiations and a more positive overall experience.
Humanizing the M&A process involves adaptability to the specific needs of wealth management founders. Hue Partners negotiates deal structures to accommodate each founders’ preferences and financial objectives. We believe that when you pair the right cultural fit with the proper deal structure, magic happens. Whether it’s creative terms, earn-out provisions, or customized terms of sale, we ensures that founders’ interests are prioritized, leading to more favorable terms and greater satisfaction.
Selling the wealth management firm is often an emotional journey for founders. It is their once-in-a-lifetime event. At Hue Partners, we integrate emotional intelligence into our approach, providing essential support and navigation tools during this transitional period. By acknowledging the emotional aspects of the sale process and offering the right resources, we help founders navigate the complexities of the process, resulting in a more positive experience and better outcomes.
Hue Partners is committed to building long-term relationships with founders. By positioning ourselves as trusted partners rather than mere transactional facilitators, we create lasting connections that extend beyond the sale. This dedication to relationship-building enhances the experience for founders.
Hue is on a mission to reinvent traditional investment banking by fundamentally shifting toward humanization, focusing on the aspects that matter most to founders. We built Hue Partners brick by brick to address the shortcomings we experienced as participants in traditional investment banking processes. We formulated a more personalized, communicative, and flexible approach has resulted in better outcomes for our clients.