Industry News December 2022

Fairstone M&A partner Jack Cronin looks back at M&A activity in the wealth management space

As the Christmas holiday fast approaches it’s interesting to look back at what has been an incredibly busy year for M&A activity in the wealth management space.

Most drivers of value are typically derived from the strength of underlying markets. That could be as a multiple of profitability, recurring income, funds under management or any other metric an acquirer might choose to use.

Given the unusual volatility and market downturn advisers and clients have experienced over the last 12 months, you might have expected owners of advice businesses to focus on boosting that value until such time as they can maximise their sale price.

There could of course be other factors at play such as increasing valuations, a proposition that factors in growth into the acquisition process or simply the age of principals prompting them to make a decision – we’re frequently reminded that the average age of an IFA in the UK is late 50’s.

Either way, it would be logical to assume that those who are able to secure today’s valuations in the coming years will command a greater ultimate sale price than those who decide to exit at a time where returns are suppressed.

One point to note is that the typical sale process for an IFA business takes anything from 6-18 months dependent on how prepared the seller is to satisfy the acquirers due diligence process. We might simply be seeing the pipeline for acquisitions which were agreed at the start of the year flow through to completion.

Industry news

Over the last six weeks, private-equity backed firms continued to make strides into the market with Advanta Solutions announcing the purchase of London-based Genesis Financial Planning. Progeny announced the acquisition of Lewis Brownlee Financial Services and Apiary Capital acquired Dudley-based TWM.

Fairstone also announced the completion of two acquisitions, Sabre Financial Services, based in Devon and Complete Financial Planning in Hereford, via the Downstream Buy Out model.

There were also reports of several firms entering the acquisition market. London-based Engage Financial Services made its first acquisition, acquiring Kench & Co Financial Services, adding £20m in client assets. Succession also made its first acquisition since its takeover by Aviva, buying G+E Wealth Management.

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