Having taken the time to understand our client’s risk appetite and business needs, we recommended a review that focused on the effectiveness of the target firm’s senior management team and compliance oversight and controls.
With the focus agreed, we took a two-phase approach to the due diligence project:
- In-depth review: we analysed the target firm’s business model, conflict management, advice proposition, systems and controls, documented policies and procedures, and reviewed some past business files.
- Site visit: we visited the firm’s site for two full days to understand the day-to-day operations and internal culture, and how closely this aligned with FCA expectations.
Having dug a little deeper, we saw that many of the past business issues stemmed from cultural influencers, such as inadequate adviser controls and oversight. This could cause a real issue for our client, potentially exposing them to expensive rectification should they go ahead with the acquisition. So, we created a detailed action plan that would bring the firm up to scratch prior to acquisition and reduce conduct risk further down the road.
Our client now had a clear picture of the risks of acquisition. What’s more, we also advised our client on how it could address some of the mismatches between the two company cultures, making for better integration and a less disruptive transition.