The amount of merger and acquisition activity goingon in the independent advisory industry is more than I can everremember. The reason behind it seems to be several major industrychanges occurring at the same time.

Retirements & growing larger businesses

The driving forces behind this “perfect storm” seem to be thetail end of the baby boom generation of firm owners reachingretirement (or scaling back) age, combined with the industry-widetrend toward growing larger businesses.

Each of these forces can contain various motivations by buyersand sellers that can undermine the success of M&As. This is whyI strongly recommend that before you enter into a merger oracquisition, you get very clear picture about why you want to dothe deal — and why the other party wants to do it, too.

Related: 5 things most insurance agents & brokers don'tknow about agency acquisitions

Firm owners may have many reasons why they want to sell or mergetheir firms: from simply wanting to retire; to the fact that theirbusiness has gotten too large for them to manage; to simply wantingto be part of a bigger community of people; to the realization thatthat their clients would be better served by a larger firm.

Motivations

Buyers also have their own set of motivations, including: thedesire to grow quickly, a need for experienced advisors, or aproven rainmaker; quickly increasing the value of their business;to get into a new market; or simply wanting to extend their servicemodel to more clients.

And it's because these goals can vary so widely, that it's sodifficult to make sure both the buying owner and the selling ownerare on the same page; complementing, rather than undermining, eachother.

Differing expectations

I've seen many instances in which differing expectations bybuyers and sellers, or both merger parties, led to futuredifficulties.

For example, in many deals firm owners see selling or mergingtheir business as the first step toward cutting back on working,with the goal being full retirement in the near future. However,the buying owner may see the addition of a senior advisor as thereason for the deal. This means somebody isn't going to get whatthey'd hoped for.

Related: Why insurance agency M&A dealsfail

Another common disconnect occurs when the selling owner wants tobecome part of a larger firm — but wants to continue working withclients using their old service model. Yes, there may be some goodreasons for doing this, including a continuity of service for theclients they bring with them. Yet, multiple client service modelscan create confusion, and reduce the efficiency of the newfirm.

Service model issues

Even though service model issues often are the biggest stickingpoint in M&A deals (rather than money or valuation), thesesituations can usually be worked out to the satisfaction of bothparties. But it's much easier to reach that place when you canrecognize the problem before you do the deal, and therefore workout the solution on the front end rather than the back end.

The bottom line is that in most cases, the key to successfulM&As is that both sides are clear and open about theirgoals.

ID compatible partners

Then by determining the compatibility of these two sets ofgoals, you can weed out M&A partners with a low probability ofsuccess, and identify partners that are compatible with you andyour firm.

Angie Herbers is founder of the consulting firm, AngieHerbers LLL. Email her at [email protected] orcontact her on Twitter @AngieHerbers.