USING A financial auction to find the highest bidder for your wealth management firm is easy. What’s tougher, and arguably more economically beneficial in the long run, is ensuring a cultural fit. Yet, many advisors in wealth management transactions prioritize securing the highest financial offer for sellers, rather than aligning them with the right partners. The traditional M&A route often uses a financial auction, where buyers are encouraged to bid with minimal interaction with the seller, potentially leading to mismatches in company culture and values. Alaris Acquisitions disrupts this model by prioritizing “cultural fit” through understanding and aligning the core values and operations of the buying and selling firms from the outset.In a recent session hosted by Greg Greenberg, the spotlight was on Alaris Acquisitions and its innovative deal advocacy process. With key insights from Allen Darby, CEO of Alaris Acquisitions, along with firsthand accounts from Kurt Durrwachter, historical CEO of the selling company, Ledge Wealth Management, and Bryan Keller, chief strategic officer of the acquiring firm, Dakota Wealth Management, involved in a notable successful transaction, this discussion unveiled the unique strategies that differentiate Alaris from traditional M&A processes.
Darby, drawing from his extensive experience in the wealth management industry and previous ownership of an RIA, shared how Alaris assists owners in navigating the complex M&A terrain. Alaris’ deal advocacy approach centers around finding an ideal partnership rather than just facilitating a transaction. This process emphasizes cultural compatibility and strategic alignment over mere financial transactions. Darby says, “As M&A advisors, our role involves helping sellers find an ideal partner. We use the term ‘partner’ deliberately because, in most acquisitions, sellers like Kurt and his business partner, Gina, aren’t looking to exit the business. The quality of life after the transaction is paramount. This is based on the reality that, if you ask Bryan, Kurt, or any other buyer or seller, the most critical aspect of the deal is achieving the right cultural fit.“Deal advocacy offers an alternative to either negotiating directly with a buyer or hiring a traditional sell-side advisor, emphasizing the necessity of this cultural match. In deal advocacy, our approach focuses on identifying and matching the right buyer, which is essential. We deliver value to sellers primarily through education about the market, explaining the basic models, and providing an overview of potential buyers and what they offer. There’s also a significant emphasis on helping sellers organize their data in a way that is appealing to buyers.”
A fresh perspective on M&A
One can hope to achieve a cultural match between buyers and sellers only if you know the buyer. This model requires the sell-side advisor to delve into understanding the buyer’s model –analyzing their history, team, and mandatory alignment points such as client experience, investment platform, and technology stack. This comprehensive understanding is crucial for a seller to assess whether they would be content at the buyer’s firm. Capturing and cataloging all this buyer data is a significant challenge, but their years of experience have equipped them for this task. Alaris has conducted this analysis for its 67 buyers in its network.
The deal advocacy model
Rather than conducting a traditional financial auction, their approach of deal advocacy allows them to conduct a cultural auction. They guide sellers through an educational phase,
organizing data, which culminates in their buyer discovery meeting. Here, they present their findings on how the structural realities of their business and partnership preferences align with potential firms. Alaris uses a technology called the Lens Application, which algorithmically identifies matches between sellers and buyers, providing a more objective basis for compatibility. This process ensures that only culturally aligned buyers are invited to participate, fostering a better match. There’s little reason to invite firms that do not match culturally to bid on the practice.
Durrwachter emphasized the emotional and strategic challenges of selling a business he and his partners had built over many years. His decision to engage with Alaris was driven by the desire for a partner who could understand and respect the legacy and culture of his firm, rather than just the financials.He details, “We went down some long, bumpy roads, with some firms that we thought would be great. However, it became evident that these firms were not suitable acquirers. The realization hit us that we were novices in selling, just as they were in buying. While we managed to find some good cultural fits, advancing the rest of the deal to completion proved exceedingly difficult.“Exhausted from these efforts, my partner Gina and I reached a point where we could no longer endure another year of negotiations with a single firm. Disenchanted with the auction process and seeking a very specific type of company – one that would allow us to convert equity from our firm into the new entity to foster growth without sacrificing all our gains – we felt overwhelmed. “After exploring various options and interviewing numerous traditional investment banks, we discovered Alaris. A call with Allen from Alaris quickly revealed that they were fundamentally different, offering a fresh perspective and approach.”
Ledge Wealth Management’s experience
The strategic benefit for buyers like Dakota Wealth Management
On the buyer side, Keller appreciates the transparency and pace of the Alaris process. When Darby and his team were introduced to Dakota Wealth Management, they quickly became enamored with the disruptive model he presented, which was much needed in their space. It allows them to quickly ascertain who and what they are dealing with from the buy side of things. In the process Alaris ensures a thorough educational phase where sellers like Durrwachter could deeply understand potential buyers.“The biggest surprise was how much Allen emphasized their depth of knowledge about the buyers, and he shared that insight with me too,” Durrwachter says. “Initially, I thought, ‘Okay, great, they know the buyers,’ assuming other advisors
knew just as much. But as we got deeper into the process, the extent of their knowledge was truly surprising. They really knew everyone on their list, which brought a sense of comfort.“To Bryan’s point, this depth helped us speed things up, which was exactly what we needed. We weren't under a strict deadline to sell, but we were exhausted from the process. It was reassuring to go through a process where Allen could answer every question I had. “He didn’t need to call the firm to check on whether they would let us manage our own money our way, whether we could roll equity, what their structure was, how long their involvement would be, if there was private equity involvement, if they had an internal CIO, or what their technology stack was like. They just knew it all. When we narrowed it down and went through Alaris’ process, which has even gotten better, and they sent us decks on firms like Dakota, it all came together.”
A call for industry change
Keller finds there’s an eagerness in the industry to make the transaction happen. However, he points out, “The group at Ledge is still early in their careers, which made the transaction secondary to their future prospects over the next five, 10, or 15 years. The significance of their long-term goals far outweighed the immediate transactional details. If Kurt and Gina had chosen the wrong representative, they might have secured the same financial outcome but with a less favorable long-term impact, which is crucial for where they envision themselves several years down the line.“Alaris added significant value by focusing on this cultural connection, ensuring that Kurt, Gina, and their team not only completed a fair and beneficial transaction but also positioned themselves well for future success as part of Dakota. Looking forward a decade, Kurt will likely reflect
more on what they achieved post-transaction rather than the transaction itself. The merger with Dakota is just one step in a larger journey, not the focal point.”With Alaris, a favorable deal combines optimal economic valuation, the best cultural fit, and the best post-acquisition quality of life. These three factors together create what they consider the best deal.Darby believes the industry should adopt this approach because it serves both parties well. Even though Alaris represents sellers, they advocate for a great outcome for buyers as well, aiming for ideal outcomes for both parties. Achieving this requires an incredible amount of work. Understanding the buyers doesn’t happen overnight; it takes about 30 to 50 hours with each one to delve into the nuances of who they are, what they are looking for, and what their advisor value proposition is.Darby advocates for a shift toward an approach that values cultural fit as much as financial figures.
