Mergers and acquisitions  

Increased M&A competition among larger firms expected

Increased M&A competition among larger firms expected

Most competition in the advice merger and acquisition market during 2022 will take place at the larger end of the market, Louise Jeffreys has predicted.

The managing director of M&A advice broker Gunner & Co said an area to look out for this year was the potential increased competition at the larger end of the market, where firms with profits of more than £1m are in strong demand.

She said: "We’ve seen multiples for this segment of the market creep up, and I would expect that trend to continue, and double-digit multiples could become the norm for these firms. 

“For the first time in the last couple of years, reflecting on our pipeline of sellers, we aren’t seeing a huge amount of sentiment to rush to complete deals ahead of the Spring Budget announcements. 

"There remains some wariness around changes to Business Asset Disposal relief (formerly Entrepreneurs’ Relief), however since it has been cut to relief on a maximum of £1m of capital, it has been mooted this will not be tinkered with further."

According to Jeffreys, all indicators going into 2022 pointed to continued growth, both in terms of deal volumes and deal values for the financial planning M&A market.

She said many of the start-up consolidators, which are backed by private equity, were very much in the early stages of their growth plans, which meant there were hub opportunities remaining across the UK for larger scale firms looking to develop their businesses. 

“Alongside that, the more mature start-ups are continuing to bolt on smaller scale client books and businesses to the hubs they have established over the last couple of years,” she said.

“And of course, you can add to that the traditional buyers, the nationals and the regional firms typically merging and acquiring locally.

"The buy-side market’s eagerness coupled with both the ageing population of advisers leading to retirement sales, and the spotlight on a new way of selling for younger business owners delivers a perfect storm of supply and demand.”

Jeffreys said the focus for Gunner & Co ahead will be much the same and the mission remains to ensure all business owners are fully prepared when the time comes to sell. 

sonia.rach@ft.com