Inside the MNP Merger Strategy
Mergers are a regular part of life at MNP. We frequently and happily welcome new faces to the MNP team as our's and client's needs change. In the last couple weeks, two new merger additions, Mantralogix Inc. in the Mississauga Office and Rick Hamilton in the Southwest Ontario Region, have come on board, bringing to seven the number of mergers we completed in the last 12 months, including:
- FBB Chartered Professional Accountants LLP (Northern BC)
- TW Hawes, Inc (Port Moody Office)
- Roberts, Marlowe, Jackson, Jackson & Associates (Oshawa Office)
- Collins Blay LLP (Kingston Office)
- 4Plan (Ottawa Office)
When considering merger opportunities, we aren’t just looking outside-in, we also look inside-out. We consider the state of the current service area and our succession planning as well as opportunities in different regions, service lines and niches.
Not all mergers are the same
Each merger is unique and usually serves a slightly different purpose and value. The merging-in firm could be a general or speciality practice in a new region or to an existing office; it may be adding just a piece of some anchor firm or adding a sole proprietor; or it could be the way to add a new service or niche in either a new or existing region.
Our motivations for merging can vary and are rarely of a singular purpose. Most often there is an expectation or belief there will be synergies associated with the provision of multiple complementary or interrelated services out of a location. We want to be able to take what we do well, add it to what the merged in firm does well and then take this package of services to new or existing markets or clients.
Mergers that add size or strength to an existing service delivery in a region or across the firm in a service line build the leverage to expand our ability to specialize in a particular service stream. This is sometimes a primary merger motivation and often a secondary motivation.
A third motivation involves the ability to diversify our service lines, particularly to expand to a new service area in a developing region that allows us to offer a fuller range of complementary services (e.g., picking up a speciality firm). Providing single-source comprehensive solutions offer a competitive and profitability advantage in the market. If clients don’t have a reason to look elsewhere, they become more loyal, and in turn we are all better off.
Another main motivation to merge exists when the resulting combined outcome can increase our market power and thus our ability to influence the supply, pricing, etc. of services. For example, a merger can have the potential to improve operating conditions related to a particular market or client grouping. The combined entity can benefit from influence or control on the provision of service.
Our initial priority when assessing any merger opportunity is to ensure that there is an alignment on culture and core values as this is the foundation of MNP. Beyond this foundation, most everything else is operational in nature such as processes, tools and styles. There are already different and very successful styles at work across the entire firm today (rural vs. urban, east vs. west, older vs. newer). Any differences in style, approach or process are understood and respected by our merger process and utilized as part of our success formula to capitalize on what the merging-in firm brings.
Our “we operate on guidelines” value allows MNP offices to operate in a manner appropriate to each business market. Embracing differences is part of our established business values and as a result, any style and operational differences of the merged-in firm may just continue or may be integrated on a mutually agreeable timeline.