Industry News March 2022

Fairstone M&A partner Jack Cronin breaks down the key industry news from March 2022, including:

Buoyant M&A activity in the investment & wealth management space
The factors contributing to IFA business owners selling their firms

Industry news

March finished another quarter of buoyant M&A activity in the investment sector with several high-profile announcements, including Royal Bank of Canada’s £1.6bn recommended offer for Brewin Dolphin in the UK and the Channel Islands, and Aviva’s acquisition of Succession Wealth for £385m.

Also in the wealth management space, Amber River announced the acquisition of Cheltenham-based HDA, adding £380m of client assets. Verso Wealth Management announced the acquisition of Sunderland-based CDC Wealth Management and Lumin Wealth acquired Hertfordshire-based Enhance Wealth Management.

Contributing factors

There are any number of reasons that could be contributing to the continued upswing of business owners contemplating (and completing) sales in the wealth management space.

These include inflation as measured by CPI being at a 30-year high, PI premium hikes, increases across the board in regulatory costs, not to mention the time spent completing any FCA requests, tax changes in the form of increases to corporation tax and the prospect of further reduction in BADR (previously entrepreneurs relief) and consistent rumours of an increase to Capital Gains Tax.

These factors all mean that for a well-run IFA practice to remain at the same level of profitability year on year, it must grow at a level proportionate to the impact of the factors listed just to stand still.

Although it is not possible to shield from all the above, it stands to reason that sellers are going one of two ways – a simple transaction to allow them to capitalise on what they have built… or an opportunity to partner with an organisation that mitigates against the factors mentioned above by providing the framework, capital and resource to grow faster.

A sale of an FCA regulated business needs FCA approval which can take upwards of three months. Due diligence of regulated companies is rigorous as buyers look to ensure any regulatory issues are identified and the potential risks can be mitigated and/or the costs of rectification quantified.

Many business owners overlook this fact and close themselves off to opportunities by simply leaving discussions too late. If you’re ever planning to sell your business, it makes sense to understand what buyers want and how long the process takes.