Mergers and acquisitions  

Adviser acquisitions set to spike next year

Adviser acquisitions set to spike next year

The number of advisers looking to sell their businesses could spike next year in the wake of the coronavirus pandemic, according to predictions from a merger and acquisitions broker.

Joshua Lee, senior broker at Gunner & Co, told FTAdviser he was anticipating a spike in advisers looking to sell their firms over the next couple of years. 

Mr Lee said: "Financial planners are on the whole a very caring profession as well as a sales profession, so advisers are conscious they do not want to leave their clients in the lurch with a new firm - that is certainly a message which is coming across. 

"But I think there is definitely going to be a position of financial planners deciding that now is the time they don't want to try and ride this storm and stay with their business through the recovery process, and actually it would be in their clients' best interests to hand that responsibility to a larger firm."

Advisers who were considering their exit in the near future should begin the consideration process sooner rather than later, Mr Lee said, because with higher demand next year sellers will "want to make sure they have been introduced to the right buyers before other equivalent firms".

Whilst some advice firms stepped back from the acquisition trail when the virus took hold of the economy earlier this year, others continued with their pipeline of deals undeterred by market volatility.

Last month Gunner & Co brokered a deal which saw IFA firm Wealth Matters acquire the pension and investment clients of Poptani Financial Solutions, in an acquisition which proceeded at its original valuation despite coinciding with market drops due to the coronavirus pandemic. 

It was the third deal completed by the introducer during lockdown, which Mr Lee said had followed a period of reduced activity and "uncertainty" in the market in the few weeks at the very beginning of the pandemic. 

He said: "Quite simply I think people were just waiting to see what was going to happen next.

"Deals we had which were quite well progressed were still very much alive, but the newer opportunities early doors were perhaps slower to come onboard."

Mr Lee added: "But actually two or three weeks ago there has definitely been a real shift in attitude from the selling market, predominantly where initially people were hoping this was a blip it seems now there is a greater acceptance that this is here for the next couple of years." 

Mr Lee said retirement was still the "number one reason" advisers decided to sell their business.

He added: "There is definitely now more of an acceptance from the selling community that...if you are looking to exit the industry you can’t just wait for this to blow over." 

Among firms which have pursued their acquisition pipeline during lockdown is relatively new-entrant consolidator Independent Wealth Planners, which most recently completed its tenth acquisition as part of ambitions to manage £5bn of assets in the coming year.