Mergers and acquisitions  

Three in five financial planners looking to sell

Three in five financial planners looking to sell
Credit: Pixabay via Pexels

Three in five financial planners are looking to exit the industry in the near future, according to mergers and acquisitions broker Gunner & Co.

In a February survey of more than 100 respondents, 59 per cent of financial planners said they were looking to sell their firm in the next three years.

Nearly two-thirds (63 per cent) cited retirement as their main motivation for approaching a sale.

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But the survey also found that selling a business a number of years before retirement was popular, with a third (34 per cent) of respondents saying they were motivated by future-proofing their business.

According to the research, 77 per cent would prefer an outright external sale over management buy-outs (10 per cent) or local mergers (8 per cent).

Two-thirds (67 per cent) would consider selling to large regional buyers, while 43 per cent would be open to considering a consolidator. Fewer than one in 10 (8 per cent) suggested they would sell to a restricted buyer.

Louise Jeffreys, managing director of Gunner & Co., said: “Mergers, management buy-outs and management buy-ins are notoriously hard to execute, despite often being an aspirational preference for business owners.

“Whilst they can afford the business a level of continuity a consolidator-style buyer can’t, they are fraught with challenges around identifying the right successors, agreeing the value and fund raising.”

The broker previously said it was expecting three-quarters of its annual transaction volumes to happen in the first quarter of this year.

Jeffreys told FTAdviser last year: “The momentum to sell brought on by the pandemic, the continued ageing of small business owners in this profession, the lure of private equity money into the buying market diversifying the options a seller has, and all the owners that put it off in 2020, will mean that transactions could explode [this] year.”

But advisers looking to sell their business have been warned not to underestimate the threat of professional indemnity insurance cover, which experts have warned can kill a deal.

Firms with no defined benefit transfers on their books have also been described as "significantly more attractive" to buyers on the acquisition trail, although consolidators have found most sellers have activity in this area.

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