Mergers and acquisitions  

Advice acquisitions about more than 'deepest pockets'

Advice acquisitions about more than 'deepest pockets'

Successful buyers in the wealth management market are not necessarily those with the "deepest pockets", according to a consolidator which is preparing to snap up satellite offices in the UK this year. 

Leigh Philpot, head of wealth management at Kingswood, told FTAdviser the company was set to expand its acquisition strategy to include smaller businesses in the new year. 

Mr Philpot said: "At Kingswood we have made a number of acquisitions in recent years as we build out our hubs around the UK. 

"As we are now extending that to look at smaller satellite offices, the ability of acquirers such as ourselves to deeply understand what has made adviser firms successful to date and allow them to continue to do that as part of a bigger business will be key in the consolidation story."

The company has been vocal in recent years about its plans to expand through acquisitions in both the UK and US, securing £80m of funding in September 2019 with investment management firm Pollen Street Capital to fund its pipeline. 

Most recently its UK business completed the purchase of Surrey-based IFA Regency Investment Services in a deal worth up to £4.6m and which gained it £320m in assets under management.

But Mr Philpot said successful acquisitions were about more than just the price tag. 

He said: "Acquirers who can demonstrate a great cultural fit for staff and clients are likely to benefit, rather than those with the deepest pockets."

He also said the fundamental drivers behind consolidation in the UK advice market would continue this year, with an ageing adviser demographic and no sign of growing regulatory and insurance bills abating.  

Mr Philpot added: "At Kingswood, we see an acceleration in 2021 for a number of reasons. 

"Firstly, a return to an element of normality, driven by Covid vaccines, will see many in the industry reassess what is important to them. 

"Whether this is flexible working, career changes, wanting to give something back to the voluntary sector or simply retire, the Covid period is likely to see more people look to exit rather than hold on for a stretched multiple. 

"Secondly, regulatory pressures are not going to ease and we will see more focus on 'value for money' for clients."

Kingswood has grown rapidly over the past two years, acquiring five financial advice businesses and boasting assets of more than £5bn.

Earlier this month shares in Kingswood Holdings were tipped to jump by nearly 50 per cent, as the consolidator hoovered up firms in a "fragmented market".

In an investment note from Peel Hunt, analysts branded the wealth management group a ‘buy’ and said its shares, currently trading at 27p, could be worth at least 40p — a jump of 47 per cent - in the coming years.

rachel.mortimer@ft.com 

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