Reflections On A Busy Month

As the vaccine drive is moving full throttle, so too it would seem is the UK IFA M&A market. In a month where AFH is offered £225M to be bought off the stock market, investor attraction in this consolidating market is far from waning. 

We are seeing more and more bespoke deals, giving sellers far more autonomy post-sale, driving this boost in the market. With AFH looking set to re-enter the acquisition space after a near two year hiatus I do wonder who they have left to buy and how they plan to appeal to a very different M&A market… Having bought up much of the retiring businesses around it’s heartland of the Midlands (with Newell Palmer, later sold to Ascot Lloyd, buying up the rest), and the national scene getting ever more competitive, the original consolidator may have to reinvent itself to meet the changing market dynamics and demand Private Equity is likely to impose.  

That said, January also brought the announcement of FSCS levies rising 48%, begging the question how many small owner-managed businesses can continue to operate autonomously – will this bring more business owners, heads in hands, to Brokers like Gunner & Co., to look for new ways to either run their businesses with stronger backing, or exit completely (or so AFH hopes!) 

At Gunner & Co. we’ve completed 6 deals in the last week alone, transferring more than £680M of funds under advice to buyers, which ranged from small regional buyers like Abacus Money Management to national Wealth firms such as Perspective. It’s been an even split of retirees versus younger owner-managers looking to secure the next chapter for their businesses and clients – highlighting the evidence that retirement isn’t the only motivator to sell these days.  

But it’s not all been smooth sailing this month, with two buyers looking to complete purchases in the next 8 weeks switching offers from full share purchases to asset purchases due to less than perfect DD reports – reminding us that it’s getting harder and harder to secure a share sale.  In 2020 asset purchase overtook share purchase as the preferred route of deal structuring*, leaving owners the challenging task of working with the FCA and insurers to ensure these exits don’t burden the FSCS further.  

As we continue to focus on sharing unique insight with the market, we have an ask of you.  We’re conducting a survey this month to further understand how important succession planning is in the market.  We’ve limited it to only 9 questions, so it genuinely takes no more than 90 seconds to complete, but will help us in our mission to give you the best information and insight available.  

*According to data from Gunner & Co.’s deal tracker