Alpha M&A Insights: Driving Integration Success – Distribution

Key actions, considerations, and pitfalls for managing the integration of Distribution functions.


Asset managers regularly underestimate the complexities of integrating their Distribution practices, resulting in extended timelines and prolonged ‘interim phase’ pain. As Distribution is the client facing part of the business, if these delays are realised and negatively impact the client then the firm’s reputation is at risk.

Having worked with clients on some of the most complex Distribution projects, we’ve collected a range of important insights that we see as critical to the post-merger integration process. These are set out below where first we highlight the key considerations that need to be addressed to ensure that integration process runs as smooth as possible. We then discuss the common pitfalls that can delay the integration and negatively affect clients before explaining how Alpha’s expertise can help ensure that these problems are avoided and the integration process is managed swiftly and successfully.

Key Considerations

Interim CRM approach – It can typically take between 8-12 months for a new CRM system to be designed and implemented. Until then Distribution staff must find a way of managing clients across two platforms. This is especially crucial if both firms previously had a relationship with the same client. An interim approach must be defined to enable both systems to talk to one another, allowing for the allocation and prioritisation of client relationship management activities.

Increasing the monitoring of ‘at risk clients’ – Large change periods are a risky time for relationship managers, as clients are more likely to leave during times of uncertainty, especially those that were ‘at risk’ before the merger. Sales teams should track existing ‘at risk’ clients closely and upgrade any new clients to the risk register that may be considering leaving because of the merger or acquisition. Sales teams must work closely with their counterparts to develop specific communication plans around these clients.

Unlocking one person’s secrets – Key person risk is increased during times of change, when there is a higher chance of these people leaving. As an example, firms may have very few staff members who understand the nuances of data flows into and out of a CRM system, which may have seen significant iterative inhouse development over the years. Or there may only be one member of the sales team that understands the specific requirements of certain confidential clients. Collating this information and redesigning these processes to fit with the target integrated organisation should be done early. Firms can mitigate this risk by employing a fully integrated and up-to-date CRM system and training sales teams to be well disciplined in their CRM management.

Data migration dilemma – Distribution teams often wish to use mergers as a catalyst to drive innovative change within their business. This is not surprising; distribution solutions based on strong data architectures have the power to revolutionise the sales process. However, your partner firm may be running on a simpler CRM system, with less data. Whilst it is possible to migrate simple data to a more complex system, this can lead to downstream breakages due to the lack of mandatory data points. Often the best policy is to migrate the complex system to the simplistic one and build from there, however, this can pose a difficult decision for Distribution leads who will see it as a step back, no matter how temporary.

Common Pitfalls

Poor/ insufficient communication with clients – Delays in communication with clients can mean that they discover important account information, such as the departure of a fund manager, via the media rather than the firm itself. This is a complex and sensitive issue as the legal rights of the employees must be considered, as well as the best interests of the clients. Delays are often incurred due to a lack of understanding of the end-to-end HR process, meaning information can be leaked to the press before it reaches the sales desks.

Wasting opportunities through inaccurate RFP responses – Firms risk missing out on important opportunities due to inaccurate RFP responses, and, in worst case scenarios, may end up competing for them internally. Firms must agree early in the transition how they will respond to RFPs to ensure key AUM, revenue, and turnover data is accurate and standard responses are up to date.

Product misunderstandings and pricing gaps – A common post-merger pitfall is the provision of incorrect information to clients due to sales teams being unfamiliar with the products previously owned and developed by their counterparts. Another common issue is the misalignment of pricing across similar funds (especially once they are managed by the same fund manager). Inability to explain the products sold by the firm, as well as their pricing structures can make the firm appear untrustworthy and opaque, and incur significant FCA scrutiny.

Priority Actions

With the deal made, there are now several important, initial activities to consider, as listed below.

How Can Alpha Help?

Combined operating model design across distribution – Achieving an optimal future solution post-merger or acquisition relies on a detailed target operating model design phase to align the Marketing, Sales and Client Service functions from both firms. Alpha has gathered insights from more than 120 asset managers, pension funds and service providers in recent years and uses this experience to drive best-in-class integrated Distribution Operating Model solutions.

Distribution system expertise – It is imperative that you have a Distribution system that can scale and add value as your firm grows, this is especially true when redesigning the CRM function post-merger. Alpha’s deep knowledge of CRM systems and vendors is unparalleled within investment management, having delivered numerous CRM system design and implementation projects across a variety of global asset managers.

Data architecture experts – Data is an increasingly important issue within the investment management industry, and is crucial to the success of an integration project. Alpha’s Technology and Data teams contain industry leading data architects, who have designed and implemented some of the industry’s most innovative data solutions within the Distributions space.

Interim strategy planning and implementation – The first 100 days of an integration can be crucial to its future success and the firm’s reputation. Over the last 10 years Alpha has defined successful interim state solutions and managed the transitions to future state of some of the largest asset management acquisition and integration programmes, with a combined AUM of well over $1trillion.