Consolidator Bellpenny expects to complete another 10 adviser acquisitions before the year is out, adding to an already busy first half of 2015.
Speaking to FTAdviser, acquisitions director Dominic Rose said that their rate of deals increased dramatically over the first half, with activity on both the seller and acquirer side on the rise.
“We’ve got a strong deal pipeline, with our tenth deal of the year due to complete shortly and the same amount ready to be completed in the second half of this year.”
Earlier this month the national wealth manager completed two acquisitions, comprising total funds under management of £56m and more than 250 clients.
Mr Rose stated that there are still good quality advisory firms looking to sell, so there should be no shortage of opportunities, adding that “it’s still inevitable that some consolidators will look to consolidate”.
Brian Spence, managing partner at consultancy Harrison Spence, argued that a second wave of consolidation is being prompted by the fact that so few quality businesses are coming to market, but pressure from private equity backers is still driving the desire for asset growth.
This means consolidators are having to pay increasingly higher multiples to secure good businesses, impacting their businesses models and meaning they have to look for additional finance or a sale to a larger firms themselves.
“Consolidators are consolidating, but quality businesses are harder to find, aggressive players are starting to get desperate, with a lot of them looking for similar deals,” commented Mr Spence, adding that prices edging up towards four time multiples.
However, Fred Hansson, a partner with research firm Imas Corporate Finance, pointed out that capital continues to flow into the sector, with private equity pushing the likes of Bellpenny and Succession, while AFH Financial has recently accessed the public markets for funding.
He added that the rate of deals done by consolidators seems to be fairly constant, as when one firm slows down, others seem to take over.
Mr Spence stated that his firm, which represents advisers looking at buying and selling, has been seeing “interesting opportunities” for those smaller firms who have been quietly acquiring assets over the past decade and now want to take their business to the next level.
“With the right partner, the right strategy and appropriate finance, these entrepreneurial firms could be in a position to increase assets under management markedly in the next five years.”
peter.walker@ft.com
