Talking Points: When a growing firm decides it's time to make the next move

The following is excerpted from “Unlocking Profitability: Key Differentiators of the Most Successful Advisory Firms,” a webcast that was sponsored by Pershing Advisor Solutions. Kelli Cruz, director of research and consulting for IN Adviser Solutions, was joined by Mark Tibergien, chief executive of Pershing Advisor Solutions. The following points were made by Mr. Tibergien. On mergers and acquisitions: M&A activity is increasing, but what we're seeing is adviser-upon-adviser mergers and acquisitions rather than selling to consolidators. The firms need to get to critical mass, so merging or acquisition is a way to do that. Every adviser that uses Pershing has said merging is something that they would consider doing. On the challenges of M&A: Sellers have been deluded into thinking their practices are worth more than they are. This can create disruption in the marketplace because you're dealing with people who are emotional about the transaction. [Another thing] is, they look at the numbers and forget about the cultural factor that needs to be considered [in a merger]. On whether M&A activity will grow As the need for professional management increases, the trend toward M&A will increase. I don't think of it as an exit strategy but a growth strategy. Advisers see this as being more beneficial to them, and how transformative it can be for their business, by offloading some things to other people or by sharing part of their business.