Wealth manager Kingswood has backed its acquisition strategy to target IFAs in their mid-50s as it attempts to entice investors to the company.
The Aim-listed company has completed a string of acquisitions this year and in an update today (November 14) said the UK advice market provided a "significant opportunity to benefit from enduring structural drivers and a sticky asset base".
The comments came as Kingswood promoted its business model to would-be investors on the back of a research note which it said "significantly undervalued" the company's share price.
The company said: "While UK IFA consolidation is not new, Kingswood’s group structure allows it to offer generous potential upside opportunities to IFA principals aiming to sell their business.
"As a consequence, Kingswood provides large potential growth opportunities for IFAs in their mid-50s as opposed to the more widely implemented ‘bolt-on’ model where acquired IFAs, often in their mid-60s, are forced to integrate into a large corporate-style culture."
Patrick Goulding, group chief financial officer and chief executive of Kingswood’s operating platforms, said the consolidator would ideally want principals to stay on and help grow the business after acquisition.
Mr Goulding said they would receive "appropriate" compensation, including participation in long-term incentive plans.
According to Stuart Dyer, chairman of introducer Soprano Merger & Acquisitions, Kingswood is up against widespread competition as small but well established advice firms are in high demand in the market.
Mr Dyer said: "There are only 500 or so of these firms in the UK and everyone is after them. Consolidators will take quite a flexible approach to the age of principals at these firms and whether they want to stay on after the deal, because they are just in such high demand.
"There is nothing that different in the Kingswood model in that everyone has these firms in their sights.
"This is a congested market and if you look at the overall market these smaller but well established firms are a concentrated pool of targets."
rachel.mortimer@ft.com
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