Punxsutawney Phil says six more weeks of bad winter weather. Well, that hasn’t slowed down the merger and acquisition activity going on in our industry. Just this week, SS&C Technologies announced the $2.7 billion acquisition of Advent Software, and Fidelity Investments plans to acquire eMoney Advisor. And, it’s just barely Hump Day.

What does this mean for smaller, independent firms like First Rate? Personally, I find it invigorating. In our 24 year existence, we have never seriously considered being acquired and I don’t feel that sentiment is likely to change in the foreseeable future. I like the thrill of being our own boss, of being nimble and adaptable, and most of all, I like the culture we have at First Rate as a result of being independent.

As I see it, there are basically three types of organizations:

1. An organization that is dressing itself up for a liquidity event, like an IPO, a merger, an acquisition,
2. An acquired organization that is adapting itself to its new surroundings and leadership, or
3. An organization that is focused on providing the best experience for its customers, vendors, employees and its community without the distractions of the activities noted in the first two organizations.

Generally, the first organization is looking to rapidly improve profits and margins. This is generally accomplished by ramping up the sales effort to put more business on the books, and/or by slashing expenses. Either way, the long-term negative implications can outweigh the near-term spike in perceived value.

I feel the second organization can be in a state of confusion, lost identity, lost focus, and even anger towards the owners’ willingness to “sell out”. As such, many times the expected accretive impact of the merger never comes to fruition. Employees leave at first chance, principals leave the day their obligations, like non-competes or employment agreements, come to an end.

The third organization is one that I most closely identify. We take great pride in the fact that eight out of our first 10 clients are still with us. Of the two who left, one is in negotiations to return. These are all organizations that have been with us over 20 years. Through their own myriad of bank and wealth management mergers, acquisitions, divestitures, etc., we have been one of the constants in their lives. First Rate is able to create a tight weave between our customers and our company. We are our company. Instead of being us and them (the owners, the employees, and the customers), it is only us. We work for our customers, for each other, for our community. It is truly a symbiotic relationship that is difficult to describe, but wonderful to have.

Obviously, there are thousands of merger and acquisition success stories.  It is impossible to measure and compare what was, what is, and what could have been when one evaluates the pros and cons of a merger.  But for me, I like it just where I am; focusing on loving, giving, serving, and enjoying.

Terry Gaines( Managing Director - Manager, Business Development )

Terry Gaines joined First Rate in 2000. He works closely with customers and other experts in the industry to anticipate the needs of the performance measurement industry. In addition to his role at First Rate, Gaines serves his community through leadership positions with the Arlington and National YMCA, The Levitt Pavilion for the Performing Arts. The Arlington Chamber of Commerce, Junior League of Arlington and Leadership Arlington.