As firm leaders begin to evaluate the future of their firm, many options come to mind: remain independent, engage in M&A, consider private equity or M&A, or explore ESOPs or other capital solutions. This is a highly complex decision to make. Leaders must decide what the right path is from a business and people standpoint.
However, you do not have to make this decision alone. I have recently been working with firms as an independent advisor to explore their options and help them make the right decisions for their firm. Let’s talk about the different paths your firm can explore to ensure its successful future.
Remaining Independent: What does this mean, and what must you do?
If staying independent and not seeking private equity or M&A deals is the right path for your firm, you will need to determine how you will do this. Firms need to determine the costs necessary to compete, the capital resources needed to support those costs, and clarity on the strategy to accomplish their priorities. I will help you understand your options here and assist you in finding the resources you need to remain independent.
As to the big question, “Where do I get the money?”. Let’s consider the options.
Your Partners/Shareholders
For most firm owners, we have a lot at risk with capital and unfunded buy-out obligations. But, we must ask ourselves, could additional investment in my firm generate a return that is worth the extra risk?
The Bank
Whether it be permanent, line of credit, or acquisitive debt, consider your bank as an option for your needed resources. I understand our general aversion to debt, but we must also consider this opportunity for leverage.
Explore M&A Opportunities
It goes without saying, but M&A can create efficiency of operations that allows us to create the necessary resources. The key word is “explore”; in other words, don’t limit your thinking.
Other Capital Solutions
To create a “firm of the future,” leaders may need to explore alternative capital solutions such as private equity and ESOPs.
Why should you consider your options?
The profession is at a crossroads, and we must evolve to meet the current market forces reshaping our landscape. Even if you have decided to remain independent, exploring your options can be an essential element of your fiduciary responsibility as a leader. Things can happen that force us to make decisions at speed. By understanding and researching your options, you can be better prepared for opportunities and challenges that may not be as evident today.
If the future of your firm has been weighing on you, let’s talk. I’d welcome the opportunity to help you explore your options and take your firm into the future successfully.
