In an acquisition, sometimes things go really, really well. That’s the case with Rudi Floyd. Many of you know Rudi; Rudi’s a long-tenured MDRT member. In fact, I met Rudi at MDRT. In 2014, Rudi approached me and told me he had been conducting a search to find somebody who could acquire his practice. He had a boutique firm and a substantial amount of assets under management, and he wanted to find somebody who could make a smooth transition for him. Rudi had selected three advisors, and I was one of the three.

Rudi and I met. He met with the other advisors, and in the end, he selected me to buy his practice. I was thrilled, and I asked him, “Rudi, why did you pick me? What made me the one you wanted to work with?” He gave me reasons framed around four things:

1. I had a team of true specialists, people who were great at what they did: advisors and then my support staff. My support staff was filled with people who were in the right seats to do the right job. It made our transition very smooth. They made the client transfer easy. His clients, my clients, the staff, all worked very well together.
2. I was flexible. Rudi had some goals in life. Rudi was a longtime advisor and wanted to make 50 years in practice. He also had an AUM goal in mind; he wanted to get there, and I was willing to wait. None of the other suitors were willing to wait. As he said, they wanted him for his body, which was his AUM.
3. I was agile. Rudi had a practice about an hour north of me, and my plan was to move the practice to a more mutually agreeable geographic location, and we did that. I also had my own succession plan in place; that was attractive to Rudi because I was already 30-plus years in the business. Rudi knew that he could transfer to me, I’d transfer to my daughters, and we would have a very long runway, which was good for him.
4. We made a plan. The plan was that we would get together with a branding expert and create a new brand, a new image, a new logo, all the new collaterals. Rudi was going to move in with me. He was going to live with me for four years before the transfer took place, and he did this. We used my staff, my phone number, my website, my email address — all the things that made it easy for his clients to want to continue to be part of my firm. We hired a lawyer, and we crafted a great agreement that was fair and flexible, and Rudi moved in. Rudi transferred the practice to me three years ago. We haven’t lost a single client in three years.

Sometimes things don’t go well and that was the case with my second acquisition. The advisor was killed in a skiing accident, and his wife was given three months to transfer the practice, or she would lose the ability to do so. This gave us no time to prepare, no time to make a plan and no runway.

The practice did transfer to me. I called Brian Heckert, who helped me develop the strategy for this, and I made a fatal flaw in this transfer: I didn’t listen to everything Brian said. Brian advised me to create a deal that had clawbacks built into it, so if the AUM went down, I would pay less. If the AUM went up, I would pay more, and I did do that. I wanted to be benevolent here, and I created a floor in the plan. About six months after the practice transferred to me, two-thirds of the assets were gone. The advisor died; the clients didn’t know me. I was the highest suitor, for all they thought, so I lost a lot of the assets. Fortunately, this wasn’t just an AUM practice; it was an AUM and a life insurance practice.

We bought it for the AUM, but we had to make our money with the life insurance practice. We created a very nonthreatening review process where we went through the clients’ products, as we all do. We ended it with one simple sentence: “Do you feel your insurance protection is adequate?” We shut up. More than half the time, people didn’t feel they had enough insurance in place, whether it was life, disability, or long-term care insurance. Using this process and a sales process that we developed, in about six months to a year, we had made enough life, disability, and long-term care insurance sales to fully pay for the acquisition of this practice. It was something that was going really badly, and we ended up making lemonade from the lemons.

These are a few things that were important to me and helped me have a successful transfer:

• Have bandwidth. By bandwidth, I mean have the ability to acquire a practice.
• Design a practice that you would want to work in. If you do that, someone just may want you to acquire their practice, and that’s what happened to me twice.
• Have staff. As I said, have the right people in the right seats, and make sure that they know their jobs and that they have a communicated transition strategy.
• Be proficient in what you do.
• Specialize.
• Be flexible. We’ve talked about flexibility. It’s not going to go your way all the time; be able to pivot.
• Don’t be greedy. Many selling advisors want five, six, seven times multiples; many buyers want one or two times multiples. The best deal happens when you have fair, open and honest negotiations and use a lawyer. I can’t stress this enough. Rudi and I have referred back to our contract many times. We’ve never had a dispute, but as time goes on, we kind of forget some of the things that we’ve said or things that we’ve put in place. We’ve referred to it for some clarity.
• Don’t acquire before you’re ready to acquire. I tried that earlier in my career; it didn’t work. Nobody wanted me. I wasn’t ready for it. I didn’t have the right practice.

Onto my third acquisition. This acquisition started last year, and it will be completed in 2025. This was very different. This advisor didn’t seek me out. I felt like I had my things worked out here, and I reached out to three advisors in my area to see if they would be interested in talking with me about selling their practice. I spoke with all three, but I only found one who lined up with my morals and my client-centric approach, and that was Bob. Bob and I got together. We used the plan that I created with Rudi’s acquisition in 2018, and we moved Bob into our office last June. He’s now using my business cards, my name, my website, my telephone number and my staff, and the phone calls all go through my people. This transition will be successful.

John R. Benton Jr., ChFC, CLTC, is a 17-year MDRT member with five Court of the Table and three Top of the Table honors. Benton has been with Prudential Financial for more than 35 years and has received many accolades over the years, such as the National Financial Planning award and numerous Prudential Presidential Citations.