Sometimes You Just Have to Ask!

Following a performance, the great Louie Armstrong was once questioned by an interviewer about his definition of jazz music.

“Satchmo” glared at the writer and curtly replied, “Man, if you gotta ask, you’ll never know.”

I thought about that long-ago response by one of America’s musical icons and its seemingly anachronistic application to the M&A arena.

Six years into my second life as a consultant to the accounting profession, I’m still amazed about how many of our existing or potential clients are still unsure of what success looks like.

Sometimes you do have to ask.

Case in point.

I once questioned the owners of a firm in critical need of a succession plan why they had in fact chosen a firm I felt was far too large for them to assimilate and have any subsequent voice in governance. The firm’s managing partner replied, “Because they’re bigger than us.”

I could have made an off-color joke about size and how it matters, but like I tell every seller hopeful or every attendee in a CPE session that bigger isn’t always better. Yes, larger firms do offer a number of advantages – more resources, a greater platform of services for cross-selling etc. But sheer size isn’t always the answer to a firm’s lack of succession.

No, bigger isn’t always better, but you know what? Better is better.

Another client who was mulling a merger had, like the example above, already selected their affiliation partner. When I asked as to why, my inquiry was met with an attitude of “How could you ask that?" Apparently, they were chosen because their soon-to-be-partner had executed several mergers over the past years and that M&A pedigree is what attracted the seller practice.

Yes, experience surely helps but then again, under that premise, if someone has been married four times, then would the fifth time will be the one that lasts because of their experience in heading to the altar?

There was no discussion of the partners’ or staff roles going forward, expectations or new business incentives. Well you get the idea.

I cringed at the image of what the ensuing due diligence process would look like.

There are several reasons behind firms seeking to merge and I won’t veer off on a tangent and list all of them here, but one universal thread should be that it will help ensure the continued success of the mergee.

And don’t be shy about asking.