The partner for consultancy Harrison Spence said Standard Life, whose financial planning business 1825 has announced three acquisitions over the past few weeks, had been “going about the business of buying businesses the right way”.
“Essentially, Standard Life is buying firms based on profit, not on income multiples. This is totally logical”, Mr Spence said.
He added: “The provider is setting a new standard in the market in terms of buying on the basis of profit. Plus, most of the vendors are staying with the businesses so the way in which Standard Life has gone about this is very professional.”
According to Mr Spence, because Standard Life has raised £3bn in the space of a few months with these acquisitions, the transition into a large distributor “is going to be a doddle”.
Mr Spence said: “It has been working with these advisers on its platform for years. Plus, it took nearly a year since 1825 announced it was looking at firms before we heard anything.
“I was frustrated by this delay, thinking: ‘Why is Standard Life dragging its heels? There are great opportunities out there’. But it is like the tortoise that has won the race. We were proved wrong.
“The company was dotting the Is and crossing the Ts and taking its time getting it right, when some other consolidators have been rushing to scoop up small firms’ assets under management, and getting it wrong.”
Standard Life launched 1825 in July 2015.
At the time, Steve Murray, chief executive of 1825, said this was in response to fundamental regulatory and market changes driving unprecedented client demand for financial planning.
He said: “It has never been more complex for people to save, retire and plan for the future, so quality financial advice has become a must-have for many.”
Standard Life renamed its restricted advice business 1825 in July 2015, with offices in Edinburgh, Leeds, Sheffield, Bishop Auckland and Reading.
At the time, Standard Life said 1825 would be looking to acquire advisory firms across the UK, but had gone quiet until March 2016, when it announced its intention to buy Norwich-based Almary Green, Scottish firm Munro Partnership and London-based Baigrie Davies.
Mr Spence added: “A lot of the other huge acquirers have done well, in my opinion, for the advisory market and for the end client but from now I believe Standard Life’s acquisition model will be the one others will follow.”
| On the trail |
15 March 2016. 1825 reaches agreement to acquire Almary Green in Norwich. 21 March 2016. 1825 announces plans to acquire Munro Partnership based in the West of Scotland. 5 April 2016. 1825 announces plans to purchase London-based Baigrie Davies. All transactions are expected to complete in the first half of 2016, subject to certain conditions being satisfied, including receipt of regulatory approvals. |
Standard Life’s recent buying spree marked a turnaround from its positioning on the advisory market in 2010, two years before the Retail Distribution Review came into effect, when it sold its 15 per cent holding in national advisory firm 2Plan to multi-tie proposition Openwork.
Also in 2010, it divested its 20 per cent stake in RSM Bentley Jennison.
At the time, distribution director Stephen Ingledew said the decision to sell 2Plan was because Standard Life did not want to be “so involved in the delivery of independent financial advice”.
In terms of support services providers, Standard Life retained its near 25 per cent stake in Tenet, bought ThreeSixty outright but sold its 10 per cent stake in SimplyBiz in 2013.
In 2015, it bought advisory firm Pearson Jones in a move hailed as a return to the advisory distribution market. This garnered assets under advice of more £1.1bn.
Steve Murray, chief executive of 1825, said: “A key part of our strategy and business model is based on working with high-quality firms that share the same beliefs as we do.
“So when we look at potential acquisitions we consider a range of aspects, including the potential growth within the firm, the quality of the control environment, recurring revenue and profitability – and importantly, we are looking for businesses who share the same values and vision, and who put the client at the heart of everything they do.”
When asked about the lengthy due diligence process, Mr Murray said: “Our due diligence process is designed to support this objective and help ensure we have the right foundations in place to support a business being run for the long term.”
