News

14
Jan

Has the advice market reached peak M&A?

This week our MD Louise Jeffreys has been sharinig Gunner & Co.’s experience on the FT’s most recent podcast, where she was asked a critical question. Has the advice market reached peak M&A?

The advice market saw a surge of a 50% increase in year over year mergers and acquisition activity during 2021, with the growing number of start up consolidators adding to total deal volumes.

One the podcast, she was joined by, Heather Hopkins, managing director at NextWealth, who questioned whether M&A activity in the advice market had peaked.

She said: “Our view at NextWealth is that actually the pace of consolidation of the financial adviser market might be tailing off because we’re hearing from some brokers and consultants, the number of new firms contacting them looking to sell has really dried up but there’s loads of firms looking to buy.”

Hopkins explained that due to the figures and multiples being well reported, firms know what they expect “if they haven’t been that carrot yet, or they’re looking to sell”. 

She said: “The volume we’ve seen over the last couple of years – I don’t see that as sustainable, looking forward and I think the front is actually more focused on organic growth now.”

But Louise Jeffreys, managing director at Gunner & Co, said: “I think this question around what’s in the pipeline is really key because actually the time it takes to do a deal, certainly firm analysis, is significant. And so deals aren’t happening, they’re not starting and completing within three, four or five months and I find that business owners are often brewing and to a degree building their exit strategies for years.”

She explained that the start-up consolidator market is here to stay. 

“Predominantly, they’re looking to grow to a significant size to look at listings – that is what they typically talk about and I don’t think all of those will happen. I think there will be consolidation of a number of those buyers as they get to £4,5,6,7bn under management.”

Louise Jeffreys, 2022

Jeffreys said the total volume of transactions was unsurprisingly up during 2021, with a 50 per cent increase year on year.

This came off the back of a 19 per cent reduction of total volume of deals for 2020, but even so 2021 volumes were up 21 per cent on 2019 numbers.

She said: “We’ve got these new buyers entering the market that are opening up markets for business owners that might not have sold in the past, which I think is driving some of that transaction growth but it is non-stop.”

If you would like to book a meeting with Louise, to discuss the market and any potential acquisitions, click here.