Fairstone offers a shield to IFA firms considering a sale to offset headwinds across the sector

Fairstone, one of the UK’s fastest growing wealth advisory firms, claims that headwinds across the sector caused by bear market pressures and inflationary costs, could have a direct impact on business values for IFA firms looking to sell now.

But by focusing on growing profits during the current downturn and controlling the timing of their sale, IFA firm owners can navigate the current unfavourable market conditions and maximise business value.

While most acquirers in the sector favour outright purchases, firms joining Fairstone’s Downstream Buy Out (DBO) acquisition model enter into a partnership first. This gives firms the unique opportunity to be supported on a variety of levels to grow and maximise profits ahead of a sale, safeguarding business value even during periods of market downturn.

This wealth of support includes organic growth funding, qualified client opportunities, as well as a dedicated centralised compliance and paraplanning service.

As a further insurance against market fluctuations, firm owners can choose when in the future they decide to sell to ensure they capture as much of the market and performance upswing as possible to crystallise maximum value.

Fairstone CEO Lee Hartley said:

“Why jeopardise a lifetime of hard work by potentially selling at the wrong time? We constantly advise our clients against selling out of investments at the wrong time, the exact same principle applies to owners of financial advisory businesses. Most acquirers in the sector favour outright purchases and firms selling now against a challenging market backdrop, could well receive less value for their business.

“In this climate, it is essential for IFA businesses that are looking to sell to focus on growing and preserving the value of their business first to offset the impact of uncertainties in the market.

“Our DBO model offers a proven platform to do this, as we act as a growth partner for businesses, providing the centralised resource, technology and capital to support sustainable growth ahead of a sale, making a real impact on profits and valuation even in unfavourable market conditions.

“It’s an innovative approach and one that embeds flexibility at its core, with business owners empowered to control the timing of the sale window to optimise value, which is particularly pertinent in the current climate.

“In simple terms we are looking for firms who don’t want to sell today but instead partner with us and grow with our support to increase profits and valuation, without compromising on client service or choice.

“All of these things make us different in the sector and should give business owners the control and comfort they need to optimise their business value, rather than simply rushing into a sale today during unfavourable market conditions.”

Earn-out success

The success of Fairstone’s approach is borne out in the full earn-out figures which the group publishes, which shows that firms acquired are demonstrating continued organic growth, exceeding their target sale values and consistently receiving pay-outs far above their initial evaluation.

Latest figures released earlier this year showed that firms acquired by Fairstone received an average of 116% through the earn-out process and crucially none received less than 100% – results that are unprecedented anywhere in the sector.

Firms also have the additional comfort of being able to pause earn-out payments in the event of a major market correction which would negatively impact their overall sale value.

Hartley added: “The flexibility of our proposition as well as our proven ability to support long-term organic growth on a number of levels enables IFA firms to protect and maximise their value whatever the climate. Crucially we also share the significant post-sale value that can be created, and both of these factors really set us apart from our peers.”

Interested in becoming part of the Fairstone family?

To find out more about how Fairstone can shield you from external pressures, speak to a member of our M&A team today or find out more below: