Companies  

Broker in tie-up to offer loans for adviser buyouts

Adviser sales brokerage Retiring IFA has launched an option on its website for advisers seeking to buyout peers to obtain finance to fund a particular acquisition, which it says could make “buying a reality for firms” who may not have the funds needed.

The firm, which offers retirement, merger and exit strategy advice to IFAs, has launched the option using one unnamed lender, but plans to expand the panel to include other high street and niche lenders.

An instant finance quote can be obtained through the Retiring IFA website by inputting financial details, as well as the business and applicant history.

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An interest rate of 3.7 per cent applies to the borrowing and a minimum deposit of 20-30 per cent of total purchase price is required. Due diligence on the buyer firm’s eligibility for borrowing is executed by the lender through this online process.

The announcement comes in the wake of news in September that investments, life and pensions giant Standard Life is offering to bankroll adviser buyouts as part of a programme to extend loans to intermediaries to help fund organic and acquisitive growth.

Adviser reaction to the practice was mixed, with some raising issues over potential conflicts of interest and others stating it is a natural consequence of reduced lending on the part of traditional lenders such as banks.

Figures from Retiring IFA revealed that 75 businesses were sold through the firm from August 2013 to August 2014, compared to 57 in the comparative period from August 2012 to August 2013, suggesting an increase in consolidation.

Stephen Hagues, Retiring IFA founder, said: “Our successful move into this finance option is indicative of the confidence level in the sector. It shows that money is flowing cheaply again and opportunities are definitely there with a trend of more adviser firms coming to market, which is reflected in more deals completed.

“In terms of our process, offering this finance option will make buying a reality for firms with aspirations to acquire, but are perhaps not there yet from a financial point-of-view. Owners retiring will have more options available to them.

“It may help national consolidators ramp up acquisitions, aiding those regional players and quality firms with a few branches dotted around the UK, who with this finance available, will be able to acquire to grow their business and achieve economies of scale.”

donia.o’loughlin@ft.com

Additional reporting by Ashley Wassall