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Financial advice firm consolidation set to continue in 2024

Smaller financial advice firms are set to remain in the cross hairs of industry consolidators with the number looking to sell or exit the space likely to ramp up in 2024 despite ‘tepid markets’, reports financial services lawyer Ed Foulkes.

Ed specialises in mergers and acquisitions in the financial services industry and believes consolidation shows no signs of slowing down in 2024.

An industry containing a shrinking, but still sizeable number of directly authorised firms and a market with inherent value have led to an influx of buyers – often supported by private equity houses – seeking opportunities in this category as the market shifts,” said Ed.

Despite some challenging conditions, smaller firms are more likely to be looking to sell or exit, with sole traders most likely to have been approached. This puts owners in a great position.

According to NextWealth’s latest financial advice business benchmarks survey, 16% of advisors are considering selling their firm or leaving the market altogether in the next 18 months (up 5% year-on-year) with 48% approached about an acquisition the firm.

The report found “tepid markets” may be “dampening optimism”, with the share of firms looking to sell over the past three years increasing from 4% in 2021 to 14% in 2023. Those saying they will exit the market is at 8% in 2023, up from 1% in 2021 and 2% in 2022.

On the positive side, this means that firms are well set up for growth when markets recover; that can be a key value driver, with acquisitions structured to adjust pricing accordingly,” added Ed.

The CISI, PIMFA and NextWealth combined forces to publish the report to allow financial advice professionals to compare their firms with those of their peers with results based on a survey of 244 financial advice professionals conducted between July and August 2023.

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Key contact

Ed Foulkes

Partner, National Head of Corporate team

Ed is a ‘pragmatic and practical’ corporate lawyer dealing primarily with mergers and acquisitions. He has specialisms in the financial services, fintech and professional advisory sectors.
View profile for Ed Foulkes >

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