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Key risks with client transition in small purchases


When buying (and selling) client fees, it’s clearly in the best interests of both parties to make the transition as gentle as possible for the clients involved in the exchange. After all, clients don’t choose to be ‘sold’ and they have every right to reject a new service arrangement if they’re not comfortable with it.

In most cases, the transition process proceeds without too many hitches when the selling firm is absorbed with its team intact. Clearly, the ongoing presence of client relationship managers has a significant calming effect on clients. Even so, there’s always a risk that clients will use the opportunity to review the service they receive.

What are the key risks with client transition and what can firms do to address them proactively?

  1. Client engagement

Whilst it’s probably not necessary for firms to re-engage clients as soon as they come on board, it’s beneficial that, where possible, new clients are greeted in a meeting or by phone rather than simply sending an email or letter. It’s worth the effort and can quick dispel any concerns or issues arising. Consider dividing clients into 3 groups, those than should be seen face to face as soon as possible, those that can be greeted over the phone and those that can be engaged as their work comes in.

  1. Service expectations

It’s often the case with small purchases that some clients have a high expectation of the level of service, based on years of familiarity and engagement with a sole practitioner. In an ideal situation, the purchasing firm has a ‘client service excellence’ charter that outlines service standards and a culture that supports these standards.  Service standards should include response and turnaround times.

  1. Fee for service

Clients will of course be concerned about a potential increase in fee levels based on their transition to a ‘larger’ firm. Clearly, an increase in fees without any additional value in service will likely result in loss of clients. The challenge is firstly to show that service levels are maintained or even improved through efficiencies and then to demonstrate how additional value can be provided.  Then a discussion about fees is a reasonable expectation.

  1. Systems and processes

It’s essential that workflow management systems and processes are integrated as early as possible in the transition process. This often requires significant IT support and may result in  short term delays in job turnaround time. The key to preventing issues arising is a strong level of administrative support in driving procedural changes and keeping clients in the loop where necessary.

  1. Relationship dependence

It’s clearly in everyone’s interests that key relationships are maintained during the transition process and probably for at least 12 months following this process.  However, this isn’t always possible. The best way to address this up front is to let clients know that whilst the key client manager is still around, the client is supported by a team with alternative points of contact. Then focus on introducing the client where possible to key alternative contacts.

It seems simple, but often valuable fees are lost simply because a formal process for managing transition of clients is not implemented. By putting in place specific steps to manage client relationships, key risks associated with transition following M&A can be significantly reduced.