Valuations for some Sipp providers are “look pricey” at present and have led Mattioli Woods to focus more on organic growth, according to executives at the firm.
Chief executive Ian Mattioli said in terms of acquisitions, the Sipp provider market is varied at the moment, with “good businesses out there which we are speaking to - but also some where the valuations look pricey”.
He said the firm has been in conversation with a number of rival Sipp providers, but that by design Mattioli Woods aims to gets to know these potential purchases properly before it gets too interested.
Nathan Imlach, finance director and company secretary of Mattioli Woods, noted a few high profile transactions recently, stating “businesses in our space are in high demand at the moment” as consolidation is driven by private equity backers.
He said: “With a number of people interested in the same asset that increases the price. Some models are buying things they think they need.”
The deal-making talk comes after the group reported assets under management and advice up 29.5 per cent to £6.49bn in the second half of last year, from just in excess of £5bn during the first half of the year.
This was in part backed by fundraising in June which led to the acquisition of Boyd Coughlan, the Taylor Patterson Group, Lindley Trustees’ pension business and the latest purchase announced last week of Maclean Marshall Healthcare.
However, the executives at Mattioli Woods said organic growth will dominate its strategy over the coming months, as opposed to buying rivals.
Mr Mattioli said the strategic medium-term goal is to create a business with about £100m of assets, both organically and through acquisitions.
Robert Lewis, director at Heritage Financial Solutions, said acquisition is a key driver in financial services development at the moment and is something that features on his business plan going forwards.
He said: “Valuations are important, but the days of 10 times earnings have gone. However, if a business offers more than value and it compliments your existing business in a different way, then I can understand a business stretching values to obtain the business, but caution is key.”
Andy Bell, chief executive of AJ Bell, added history is littered with acquisitions where forward looking assumptions have been prepared using rose tinted spreadsheets.
He said: “Account needs to be taken of the headwinds that the industry is facing, not least the impact of increasing regulation and supporting capital, an insatiable appetite for IT spend and a lack of scalability in the more traditional business models.”
ruth.gillbe@ft.com
