We talked with Verity Larsen about:
- How firms can prepare for M&A by modernizing technology, streamlining operations, and ensuring clean data to increase a firm’s valuation and make the transition smoother
- The importance of uniting people, processes, and technology to navigate challenges like internal culture shifts, data merging, and the client experience
- Why a successful merger depends on having the right team, a clear plan, and a structured approach to blending systems and operations
About Verity Larsen:
Verity Larsen, CEO and Principal Consultant at Versoft Consulting, brings over two decades of experience in investment management and technology consulting. In this episode of On Purpose, she speaks to the critical role modernizing technology, streamlining operations, and maintaining clean data play in preparing firms for a smooth M&A transition. Verity highlights how aligning people, processes, and technology can help prevent roadblocks like culture clashes, messy data transfers, and disrupted client experiences. She also points out many firms underestimate the effort required after a deal is signed, stressing that planning ahead, dedicating the right resources, and seeking expert guidance are essential for post-merger success.
Featured Resources
- The Versoft Consulting Website
- Versoft Consulting Contact Form
- Verity Larsen on LinkedIn
- Versoft Consulting on LinkedIn
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Full Audio Transcript:
00:00:00 - 00:30:20
Lauren Hong
All right. Well, thank you folks for listening. We've got Verity Larsen today and we are going to be talking about M&A, which is a huge topic, especially in wealth management if you look back over the last five years. So we're going to be talking a little bit more about preparing for M&A, what to do before and after the whole process, tech stacks, all that fun stuff.
00:30:20 - 00:41:27
Lauren Hong
So before we get into the details, Verity I'm going get it over to you. Tell us a little bit about your firm, or company I should say, how you got into this work. And what have you.
00:41:29 - 01:03:01
Verity Larsen
All right, well, first of all, thanks for having me. I appreciate the opportunity here to join you. So I started many years ago. I got my degree in information systems, computer information systems, and ended up landing a job at an RIA. So it was my job to be that first line of defense for users.
01:03:01 - 01:27:19
Verity Larsen
So I was working with the technology that was being used but also helping with operational improvements — process improvement — helping identify ways to do things better across the firm. And I worked at that firm for about eight years and then ended up working for a software vendor, which was literally that technology.
01:27:19 - 01:58:01
Verity Larsen
A lot of the portfolio accounting and solutions we had been using at that firm but I was doing implementations of their software. So it was portfolio accounting, reporting and billing, trading, the whole thing there. Doing all that kind of software usage. And of course, I love being exposed to so many different users and seeing how different operations and technology were being used from one hour to the next.
01:58:10 - 02:20:23
Verity Larsen
And really, that experience was the foundation that established me to go, I really would like to do this independently. I want to go out and do this on my own. And so starting in 2015 is when I founded Versoft, so now we're in year 10, which is very exciting.
02:20:26 - 02:52:29
Verity Larsen
We are a vendor-agnostic consulting company, a team of nine people working remotely across the U.S. And we have clients in both Canada and the U.S. We simply are focusing on operational improvements through the use of technology. So our services include overall general advisory services with technology.
02:53:09 - 03:23:05
Verity Larsen
Because it's a lot about the software you're using now in the processes you're doing day in day out to service your clients, both back office and front office. But then also we do lots of process reviews to recommend improvements to current operations and technology. And we help with the selection of new vendors and new technology, making sure the right fit for your business needs because no firm is alike.
03:23:08 - 04:02:18
Verity Larsen
Everybody does have their needs and their specialties and even people make an impact into the type of technology to be used. And then certainly we then get into the details of implementation and we do lots of historical transaction conversions, performance conversions, implementing data warehouses. We also have project management services, and an in-house, U.S.-based development team that builds custom applications and integration and all that.
04:02:20 - 04:05:18
Lauren Hong
Wow, that's a huge component. Do you work with integrations for certain CRMs?
04:10:05 - 04:36:06
Verity Larsen
We'll work with all of them. And the thing is, I've always said when it gets into the different technologies, it's really more about the expertise of the industry and knowing the industry of investments. And the client base — that's where it's really, really important, one CRM to another.
04:36:06 - 05:02:20
Verity Larsen
They have different features and functionalities but in general, really behind the scenes, the backend, the data structure. Yeah, it's all the same. It really is, so when it comes to building integrations using APIs, a simple programming language connecting one application to another — we're agnostic.
05:02:20 - 05:13:06
Verity Larsen
It really doesn't matter if you're using Redtail or Wealthbox or Salesforce or Dynamics or anything else. We've worked with them all.
05:13:08 - 05:32:15
Lauren Hong
Okay. So it sounds like you all cover a lot, which is great. You've got the deep hands-on work you do in this industry as well. I know we talk about M&A as one of those components and it can be so daunting. I got back from an international conference this past fall.
05:32:15 - 05:46:26
Lauren Hong
And one of the things that came up was that a lot of firms will come into these conferences really jazzed or thinking they're going to go into a succession or do some sort of M&A. They're not sure what they learn about, and they're like, oh gosh, goodness, I'm glad I learned a lot about that because now I know about it.
05:46:26 - 06:08:18
Lauren Hong
I'm not sure that's the route I want to go or at least I feel better prepared. So can we talk about where you all come in at the M&A process? I’d love to actually just start from a more logical timeline of where do you even start? If we're going to start with an M&A or thinking about an M&A, where do you all come in that process?
06:08:18 - 06:22:22
Lauren Hong
Then maybe talk that through during the M&A actual transaction session and then kind of post. So we will start from the beginning. Where should a firm be? What do they need to be thinking about and where do you guys come in from the beginning?.
06:22:24 - 06:48:00
Verity Larsen
Well, it depends on if you're a buyer or seller. So it even starts there and we work on both sides. So on the seller side, it’s really critical for firms to think about what their existing processes and workflows are. Like what technology are they using or are they doing everything in spreadsheets?
06:48:03 - 07:20:05
Verity Larsen
How clean is their data? Whatever process is around it is really interesting. I too have actually attended a number of M&A-focused summits over the last year. And what's really come to life is how important using modernized technology is to the valuation of your business and actually increasing your valuation.
07:20:19 - 07:50:14
Verity Larsen
So something I think a lot of people don't really realize is that having efficient processes and more modern technology can actually give you a better buying price and boost. And certainly if you're not at that stage, getting to that stage can take time. So if anything, it's also never too late to get started on this.
07:50:16 - 08:14:29
Verity Larsen
So the way we approach working with a seller is of course, getting in there. We like to start by doing reviews of their processes and understanding how they currently do things, what are their operations, what are their workflows, what technologies they're seeing? Are they doing lots of double data entry and things like that?
08:15:02 - 08:54:27
Verity Larsen
And really try to get them as streamlined as possible. So they're in a good place as they continue to grow or they just remain as they are, even for just future planning, whether it's succession, whatever it may be, or it is truly selling to another firm, and certainly selling into another firm if you are efficient in your processes and using better technology will make the transition a lot easier, both for users as well as the clients.
08:55:05 - 09:01:13
Verity Larsen
Just that overall experience will be a lot better.
09:01:13 - 09:12:17
Lauren Hong
One of the things to be thinking about is getting your operational house in order, from a technology standpoint. And then I'll just say also from a data cleanse standpoint. Is that what I'm hearing?
09:12:20 - 09:15:12
Verity Larsen
Exactly..
09:15:14 - 09:17:21
Lauren Hong
And then you were going to say from a seller standpoint.
09:17:24 - 09:48:22
Verity Larsen
Yeah, from a seller standpoint, our involvement tends to be later in the picture. And usually we're probably not getting involved in any sort of M&A efforts. So usually like an LOI timeline. I'd say there's just things a buyer should be thinking about looking at if they are in this M&A world. Certainly everybody always talks about culture.
09:48:22 - 10:21:25
Verity Larsen
You’ve got to have a good fit. And certainly that's important for client retention. But I'd say really, even before the deal closes, buyers should be reviewing the sellers’ accounts, their asset types, what needs to get converted? The type of custodians they use. Their reports. Just getting a better understanding of the current state can certainly impact the acquisition deal comps but also the transition timeline.
10:22:16 - 10:31:24
Lauren Hong
It's just like getting in there, getting into the day to day, a little bit more than just the balance sheet of where everything's at.
10:31:24 - 10:52:14
Verity Larsen
So that. Yeah, and certainly in the M&A deal. But it's always just work, thinking about the numbers. Like, I'm going to buy a firm for X and then it comes under my right business. There's so much more to it that you really need to think about.
10:52:17 - 11:10:12
Lauren Hong
Thinking about that kind of pre so there's a buyer. There's a seller. People are looking to engage one way or another. What are red flags before you’re even ready to sign on the dotted line that you think the buyer and the seller should be looking out for?
11:10:15 - 11:41:12
Verity Larsen
I'd say certainly when it comes to technology, are they using modern technology or not? How difficult are their current operations, their functions. I really like to go back to that idea of people, processes, and technology. That's a very common term in this industry.
11:41:14 - 12:12:12
Verity Larsen
You really need to make sure that's balanced across the board because again, it really helps with bringing product cohesiveness and bringing the firms together. Certainly those red flags have been when that hasn't been the case. It’s like if you're bringing somebody in where someone used spreadsheets and someone else is on all the latest cloud technology and has tons of automation.
12:12:14 - 12:54:08
Verity Larsen
Synergies even between the firms. Getting users who have been in the stone age and getting those users to very quickly adapt to this new way of doing things with modern technology. It's going to be really difficult for the internal teams. And the advisors. But then also, the end clients are really going to feel that strain as well because they're getting things very differently than their past interaction. Their experience working with advisors and the client service groups is going to be very different.
12:54:11 - 13:18:10
Verity Larsen
So, I think that is a kind of pain point. I've seen a red flag pop up to that point. I also heard at a recent conference, someone had actually mentioned getting someone's employee handbook.
13:18:17 - 13:25:25
Lauren Hong
Smart. Seeing how up to date it is. The new year came and did they issue new handbooks? Oh, my gosh, that’s so smart.
13:25:28 - 13:36:02
Verity Larsen
I thought so too. I was like, gosh, that's a great idea. And to me, that also helps you do a comparison to even seeing how close you are synergy wise.
13:38:19 - 13:56:13
Lauren Hong
That's a great idea. So I feel like we could actually have a whole podcast just on the pre- M&A. And I could go deeper into subtopics. But let's say that you go, okay, we're ready to go. We're ready to start this transaction.
13:56:14 - 14:18:26
Lauren Hong
We decided to move forward, with what I read, with what this looks like. So in that transition period, where do you all come in and what should folks brace themselves for, for lack of better words, sort of what you've been able to shine the light down those dark tunnels?
14:19:15 - 14:22:07
Lauren Hong
What should they expect?
14:22:09 - 15:02:06
Verity Larsen
So, there's certainly areas like getting in and reviewing your processes and who you work for, the data. I'd say mostly it's looking at bringing all of that together. So it's now lots of data analysis. It's the conversion effort. And really a lot of it has come about by them sharing that conversion but a lot of people don't think about how much time they take to ensure the consolidation is accurate.
15:02:28 - 15:14:00
Verity Larsen
And I can't say it enough. You cannot just blindly trust that you hand your data over to a vendor and then you just load it and it's going to be great.
15:14:02 - 15:19:03
Lauren Hong
It's never happened that way, right? Never.
15:19:05 - 15:41:03
Verity Larsen
So make sure you've actually planned enough time for your due diligence to ensure that consolidation, that merging of data, is actually documented. And you're good with that. I just see too many problems with that.
15:41:06 - 15:52:17
Lauren Hong
Yeah. That's so fair. And then once it's in the system, sometimes it just sort of collects dust, right? Or it's just not actually properly labeled or has no cadences associated with it. So it's such good advice.
15:52:19 - 16:19:11
Verity Larsen
That actually brings up another thought I want to share. I think it's really important for both buyers and sellers to really be clear upfront, even before this deal is inked, that they know what data is going to actually get built. And also because a lot of the buyers really only want to take performance and goals.
16:19:13 - 16:45:19
Verity Larsen
So if you're thinking you're going to have all of your transaction history going back for 10, 20, or longer years, most acquisitions are not for the transaction history. So the amount of data you're looking for, just that activity over time, is not going to get loaded into the new system.
16:45:24 - 17:18:26
Verity Larsen
So make sure you're prepared for that and your advisors are prepared for that. And of course, even the clients. Because again, how are you going to work without having that data and where you may be priced out of that as a resource for decision-making and even reporting to the client? All too often we get involved in projects and it's, oh my gosh we're halfway through the project.
17:18:26 - 17:38:25
Verity Larsen
And all of a sudden the advisor that got acquired realizes I can't go and look at the activity history from three years ago. I'm not going to have access to that. What am I going to do?
17:38:26 - 18:06
Lauren Hong
That's fair when you're sort of used to those patterns and those ways of operating. So I think it brings up to your earlier point really looking under the hood and pulling things apart before you're actually into that place where you actually have to be able to do that so both buyer and seller can make this the transition as smooth as possible, both for the current clients as well as the team.
18:06 - 18:05:08
Lauren Hong
All that culture.
18:05:10 - 18:08:17
Verity Larsen
Yeah.
18:08:19 - 18:18:16
Lauren Hong
Any other thoughts about big lessons learned as you go into that post-M&A, transition, if you will?
18:18:19 - 18:52:03
Verity Larsen
Yeah, I probably want to talk a little bit about the teams that are working on this. When people do an acquisition or even look to sell, you think okay, well, the deal is done, and we're good to go. That was all the easy stuff from my experience and my perspective.
18:52:18 - 19:26:11
Verity Larsen
Once the deal is signed and you are in that post-acquisition stage, that's when the heavy lifting really starts. And you need to ensure you have a team of people that are dedicated to this successful consolidation, this merge. And most firms don't have resources available to the level of dedication that's needed. Everybody has their full-time job.
19:26:13 - 19:47:18
Verity Larsen
This requires eight hours a day, whatever their involvement is. So think, oh gosh, now there's this whole other project, a whole other level of work that needs to happen to bring these firms together.
19:50:22 - 20:18:06
Verity Larsen
The point is if you have not really thought that through, number one, your projects are going to go on way longer than they should. And number two, your employees are going to get really upset. And burn out. And again to client experience, the client experience may be really bad as well.
20:18:24 - 20:47:12
Verity Larsen
We have had conversations with some other firms that have been doing their consolidation, this transition effort, for two or more years. And that is just mind boggling to me. So you basically still have two separate operations teams. You have two separate platforms and so on. It’s inefficient and of course distinct from a business perspective, a management perspective to operations.
20:52:08 - 20:53:08
Lauren Hong
Surely the whole thing.
20:53:08 - 21:21:26
Verity Larsen
And the client experience. I mean, all of it is so impacted. And I don't think a lot of people think about that. I was even thinking beforehand, the level of service clients are getting can make it difficult for marketing and even for new recognition.
21:21:26 - 21:44:01
Verity Larsen
And many people tend to follow Michael Kitces. And he, of course, does a lot of talking about marketing and has lots of words of advice on marketing strategy. And I could guarantee you that operating as two separate entities for years after a merge is definitely not the right thing to do.
21:44:03 - 21:59:04
Lauren Hong
He also talks a lot about target market. And really being able to lean into that. So going back to kind of a culture fit and the strengths of the team and training all of that. I just would assume those would be naturally the kinds of questions that would come out as you're sorting out the fit too.
22:01:06 - 22:33:20
Verity Larsen
Yeah, you asked about timeline as well. And for me, a typical merger, post-acquisition, should take no more than six months. If you are not fully consolidated in six months, you need to really look if that's a red flag. And at that point, if you haven't already pulled in somebody to get some additional support or assistance, you really need to.
22:33:22 - 22:44:02
Verity Larsen
I'd also say if you are getting support from somebody and it does take that long, things, are dragging out, maybe it's time for a reassessment as well.
22:44:04 - 23:02:26
Lauren Hong
That's such good advice. One of the things I wanted to call out to, I listened to a podcast several months ago and they were talking about going through an M&A. It was a business owner who was being interviewed. And she talked about one of the things she did not expect from this.
23:02:26 - 23:21:29
Lauren Hong
And I don't know if you face this at all, but it’s how mentally challenging it was and emotionally challenging it was from sort of starting this business to making that transition, which of course can impact culture. You're trying to take care of your team, all of that. I'm sure you see some of that going on too, right?
23:21:29 - 23:35:25
Lauren Hong
Not just from the team but especially from the owners or partners or founder, whomever it might be. So, I think that's something that doesn't get talked about a lot but I feel like it's something that impacts a lot of people as they're exploring these opportunities.
23:35:25 - 24:09:08
Verity Larsen
Absolutely. I think especially from the seller side of things, I tend to see more of that emotional concern from people because a lot of those folks are, of course, going to be worried about job stability, longevity. And I think a lot of people just assume if we just got acquired, they're going to be slashing jobs and I'm going to be out the door soon.
24:09:10 - 24:39:17
Verity Larsen
So I think it's certainly something owners should not overlook. They really do need to make sure they're talking with their team about what the future holds, what it looks like. Another thing I think a lot of people don't think about is the fact that merging with another organization means, of course, a larger company, meaning there's new roles.
24:39:26 - 24:54:07
Verity Larsen
There's opportunity for advancement that didn't exist at their previous job. So I think there's actually more opportunities to look forward to.
24:54:07 - 24:58:18
Lauren Hong
That's a good point too,
24:58:21 - 25:26:03
Verity Larsen
So I thought of something else to share in the pre-deal. I think there's a lot of owners who are worried about even telling employees they're going to be doing a deal. But I do think it's actually beneficial to be open and share that with your team.
25:26:25 - 25:45:03
Verity Larsen
Because I think there's a lot your team can contribute to proactively make the deal the best for the community. And it certainly helps with the transition as well if they are aware of what's going on.
25:45:05 - 25:54:10
Lauren Hong
Yeah. I think just to be open, honest, and help coach people through that. I think if they're along for the journey, that makes a really big difference.
25:54:10 - 25:55:27
Verity Larsen
So yeah.
25:56:24 - 26:07:18
Lauren Hong
Oh my goodness. I feel like we could chat for a while. But anything else you want to make sure to sort of round us out here, any additional resources we can point folks to?
26:07:29 - 26:31:06
Verity Larsen
Yeah, I'd say our website is the best resource. Anybody who’s interested, feel free to check us out. There's a contact form you can fill out and reach out to us. You can also look up our company or even me, specifically on LinkedIn. We want to connect on those platforms.
26:31:23 - 26:46:27
Verity Larsen
We're here as a resource to help both buyers and sellers pre- and post-M&A in any capacity. So however we can be of assistance, we always look forward to that.
26:47:07 - 27:04:10
Lauren Hong
Thank you so much. We’ll make sure to include those links in the show notes. Really appreciate your time and your insights on working with firms, especially as they're going through these big transitions, and making sure their teams and just the whole process is well rounded and set up for success.
27:04:10 - 27:06:14
Lauren Hong
So thank you for sharing some insights.
27:06:16 - 27:09:03
Verity Larsen
Thank you for having me again. Thank you. It was great.
27:09:05 - 27:14:09
Lauren Hong
Absolutely.
