The Human Side of M&A: Where Success Really Happens

By Ira S. Rosenbloom, CPA (Inactive)

CPA firms sometimes believe M&A success comes when the deal closes. In reality, closing is only the beginning. The true measure of a successful transaction is what happens afterward — and much of that depends on people.

Financial terms, technology, service capabilities and growth opportunities may bring two firms together, but partners, staff and clients ultimately determine whether the expected benefits are realized. That is why the human side of a transaction needs attention long before the effective date.

Prepare Your People Before Day One

Uncertainty creates anxiety, and a merger creates plenty of uncertainty on both sides.

Employees of the firm being acquired may wonder where they fit, whether their responsibilities will change, and what opportunities they will have in the new organization. But employees of the acquiring firm have questions, too. They may worry about increased workloads, new competition for advancement, or how the incoming team will affect their own roles.

The best way to reduce that anxiety is to eliminate as much uncertainty as possible.

Everyone, including partners, should understand their roles and responsibilities well before the transaction takes effect. Clear job descriptions give people time to ask questions and become comfortable with changes. Firms should also communicate what they expect to accomplish during the first 60 days and also the first six months so employees can see where the integration is headed.

Experienced non-partner leaders can be especially valuable during this process. Bringing them into the conversation early gives leadership a better understanding of employee concerns and creates trusted voices who can help others approach the transaction with an open mind.

Most importantly, don't simply dictate the transformation. Give people opportunities to participate in it. Ask what they think, what they want from the future and what concerns them. As important as it is for employees to be comfortable, partners must also be enthusiastic about what comes next. If they aren't, that uncertainty will quickly spread throughout the firm.

Build Relationships Across the New Firm

Integration cannot happen through announcements and organizational charts alone. People need relationships.

Creating cross-firm connections early, by pairing people from the two firms, can give employees an informal and comfortable way to ask questions, learn how the other organization works and build camaraderie.It also gives employees of each firm a familiar point of contact as they navigate the transition. But don't stop there. Consider internal mentors who can check in with people as they adjust to new responsibilities and opportunities.

Leadership needs to be visible as well. Managing partners, executive committee members and other senior leaders should make an effort to get to know people on both sides. The sooner employees begin thinking in terms of one firm rather than two organizations, the stronger the integration will become.

Don't Assume Your Clients Are Fine

The people strategy cannot stop with employees.

Every partner should have a strong read on their most significant clients well before a transaction occurs. What do those clients value about the firm today? What frustrates them? What might excite them about a combination — and what might worry them?

This applies to the acquiring firm's clients, too. Buyers sometimes assume their client relationships are secure, but a valued client may see rapid growth and wonder: Will I still receive the same attention? Will I be able to reach my partner as easily?

Important clients need personal attention before and after the transaction. Create opportunities for them to meet leaders of the combined firm and understand how the transaction benefits them. Share examples of how clients have benefited from previous combinations when appropriate. Then continue the conversation with planned check-ins at 30, 60, 120 and 180 days. Don't wait for a dissatisfied client to tell you something is wrong.

Remember the People Around the Firm

Firms can easily overlook another important group: centers of influence and referral sources.

These relationships often take years to develop and can significantly contribute to a firm's growth. A merger can create uncertainty for them as well. They may wonder whether the firm will continue to serve the same types of clients, whether their existing relationships will remain intact, or whether the combined organization will approach referrals differently.

That means referral sources should be included in the communication plan rather than hearing about the transaction indirectly. Firms should identify the relationships that matter most, reach out personally, explain what’s changing and what’s not, and reinforce why the combined firm will remain a strong destination for the clients and opportunities they refer.

As with clients, the goal is to preserve confidence. The people who have supported the firm's growth should understand where the firm is headed and feel comfortable remaining part of its future.

People Ultimately Deliver the Value

A strong transaction may begin with attractive economics, complementary services and strategic opportunity, but those things alone won't make it successful.

Successful transactions require deliberate communication, clear expectations, early involvement and continued attention to the people whose confidence matters most. The more effectively firms turn uncertainty into understanding and give people a role in what comes next, the more likely they are to retain their best employees and protect important client relationships. In doing so, they are also better positioned to realize the value they envisioned when they decided to come together.

The financial terms may define the deal, but the people determine whether it works.

Ira S. Rosenbloom, CPA (Inactive), is the CEO of Optimum Strategies, a highly active succession and practice management consulting organization, which focuses on CPA firms of 15–150 people across the Mid-Atlantic region. Known for his high-touch, relationship-driven approach, Ira ensures firm leaders feel confident, supported, and fully prepared at every step of their M&A or succession journey.