A Positive Outlook for Recruitment and M&A

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Well into the first quarter of the new year, we do not expect the challenges that have roiled the markets and economy since January of 2022 will abate anytime soon. Inflationary pressure, the Russian invasion of Ukraine and rising interest rates wrought havoc on traditional investment classes like stocks, bonds and cash over the past year. Market pundits and asset managers are split on whether we will enter a recession or if the Fed will guide us to a soft landing.

While these ongoing headwinds present challenges for growth in the year ahead, the landscape for mergers and acquisitions (M&A) and recruitment in the advisory profession will continue to be strong. Data from a December 2022 study supported that view, with 70% of respondents having explored a merger, sale or acquisition despite plunging market valuations and a slowing economy. Nearly half of respondents (44%) wound up making a deal, while 63% anticipated engaging in M&A in 2023.

As is typically the case, firms are looking to M&A as a means of accelerating growth, adding sought-after talent and introducing new capabilities. With valuations trending lower than they were in 2020 and 2021, one might expect aggressive bargain hunters to be buyers in 2023. In fact, 90% of industry executives surveyed by DeVoe & Company thought valuations would be somewhat lower in 2023 or would hold steady.

Recruiting or acquiring advisory firms can be daunting even in bull markets and it becomes more challenging during periods of volatility. Finding the right fit for your firm from a cultural perspective, determining that interests are aligned, and ensuring that the transaction or vision for the combined entity is mutually beneficial are imperative regardless of market conditions.

Not sure where to start? Here are some critical steps that an elite advisory firm should implement to ensure their recruitment or acquisition strategy is positioned for long-term success.