Whether it’s a merger, acquisition, or succession, a successful firm transition requires many factors to align properly. While firm owners will usually create a plan for finances and terms, not as many rely on human factors that come into play – chief among them being fear, which can be either motivating or crippling!
Of course, some level of fear is a normal emotion, and it affects all sides in any transition discussions. But how you manage that fear can make or break the deal.
Here are the seven most common fears firms encounter in M&A or other transitions, as well as recommendations on how best to deal with them.
Fear of change. Uncertainty can be frightening, and every accounting firm transition will bring change. Concentrate on how the change will make things better, and put a process in place to ensure that better results will occur. Keep dialogue focused on realistic benefits, which will nurture confidence and reduce the urge to wonder about the downside of uncertainty.
Fear of losing or gaining control. If you’re accustomed to calling the shots, ceding control fully or partially to another partner can be frightening. Similarly, if you have not had much authority, gaining control can bring anxiety. Map out a solid definition of the range of authority and responsibility, and those expectations will create comfort. Transitions often demand that someone who used to be the boss cedes some authority to another leader. While everyone knows this is the right path, it often takes a psychological toll. Discussing which clients and functions will be transitioned and over what timeframe will not only make for a smoother process, but will also make all players in the process maintain their feelings of relevance.
Fear of economic results. Nothing is guaranteed in life. Economic risk will exist whether a transition takes place or not. Often the greater risk will emerge without transition. If the deal is set up to maximize the likelihood of achieving the changes you want in terms of earnings and payouts, with protection from specific failures or missteps and realistic financial targets, this fear will subside.
Fear of proving yourself. Moving from an environment where everyone knows your value to an environment of new players will be nerve-racking. Transitioning teams should set new mutual parameters and performance standards through which all parties work together to achieve result. The process won’t be as one-sided as one firm adopting another’s standards and accountability won’t be seen as a punishment but a collaborative best practice.
Fear of losing clients. Negative client reaction is a problem for any business, especially one in transition. Worrying about how clients will perceive the transaction is often misplaced, but it should not be downplayed. The more transparent the parties are with clients, the easier it is to gain their support. Create client talking points on the benefits of the deal, and share them. If there is an internal transition, stress continuity and familiarity with the existing partners to calm the clients.
Fear of losing staff. Not every staff member will be on board with a new firm transition, but, if you keep team members in the loop about the transaction in an appropriate manner, you will be more likely to gain their cooperation and buy-in. Communicate the benefits to them, the way you did with clients. Adding bonuses, creating clear opportunities for advancement, and providing retention incentives may help sweeten the deal for them.
Fear of the end. If the deal also represents your exit strategy, worrying about what to do next is common. Use the time to focus on your other interests and plan your next steps. Ideally, the new owner will support those outside interests and value having a seasoned professional available to mentor younger staff.
Fear of change is expected, and can even be healthy as a motivator. But it does not have to be paralyzing! Put your fears to use, and create the most comfortable combination for all parties involved.