Lawrence Stephens

We are a *knowledge business

Is Now the Right Time sell your Wealth Management Business?

February 2022

Over the last 12 months, there has been healthy M&A activity within the adviser industry, with attractive valuations, encouraging increasing numbers of IFAs to contemplate a sale.

However recent data from Schroders* shows regulation and PI continue to be both costly and worrying for IFAs.  These are increasingly becoming a ‘push’ factor, triggering thoughts about succession and the future. (* Source: Schroders UK Financial Adviser Survey, 2021).

According to Gillian Hepburn, Schroders’ Head of UK Intermediary Solutions, “Advisers have seen their clients look harder at retirement planning following the turmoil of the pandemic and maybe they’re doing something similar in relation to their own plans.

”Transactions have taken place at very interesting multiples, and there may be a ‘fear of missing out’ factor at play, too.”

A recent large deal saw Perspective Financial Group has acquired Wiltshire-based Avon Financial Advisers for an undisclosed sum. This deal adds 240 clients and £42m ($58m, €50m) in assets under management to the group and comes just weeks after Perspective announced it had completed six acquisitions in the first half of 2021. Avon, founded by Stephen Cook in 2011, based in Chippenham will become part of Perspective’s office in Marlborough.

Jeff Rubenstein, Director of Lawrence Stephens commented: “If an IFA is considering selling, it is important they make sure that any legal advisor understands their business and has experience of dealing with these types of transaction and understand the commercial issues at stake. No one wants to employ a lawyer and be used as their learning curve.”

If you are an IFA thinking about selling or indeed a large group looking to expand via acquisitions, it is important to pick your advisers carefully and to choose legal advisers who have experience in dealing with sales of businesses in the wealth management sector.

Below are some tips for IFAs on selecting the right legal partner for a merger or acquisition:

  • Ask your advisor how they can add value to the deal and protect your position particularly where any deal is likely to involve any future payments (earn out), based on maintaining revenue or assets under management for a set period after completion of the deal
  • It is important to pick the right strategic partner/buyer who meets all your criteria and shares your cultural ethos, ethics and client-centric approach. This will give your clients long term security for the provision of financial advice to clients and enable you to retire with confidence
  • Check the buyer offers a flexible deal structure, so it is a positive move at the right time for your clients and staff, as well as for you personally, professionally and financially.
  • Ensure that any legal advisor understands your business and has experience of dealing with these types of transaction.

If this is of interest, please contact Jeff Rubenstein for an initial confidential, no obligations discussion to understand you plans and to assist you with your process.