The number of M&A deals targeting UK financial advisers and wealth managers has risen 11% from 398 to a record high of 440 in the past year, according to new data from international law firm Mayer Brown, with the increase being driven in large part by private-equity-backed ‘consolidators’.
These firms have been very active in acquiring smaller IFAs over recent years as they seek to build major ‘platform’ businesses in what Mayer Brown describes as a ‘highly fragmented’ sector.
Mayer Brown says consolidation can deliver significant economies of scale and allow PE-backed firms to invest more heavily in technology and other customer-focused initiatives. Another key driver of consolidation identified by the firm, is the increasing compliance requirements of the sector, which means many smaller firms lack either the management time or other resources to easily achieve compliance with the FCA’s incoming Consumer Duty regulations.
According to Mayer Brown’s survey, frequent targets for M&A deals include older IFAs looking to exit their firms to fund their retirement. And with recent data published by the FCA showing that 17% of financial advisers are over 60, Mayer Brown says that there are still likely to be many more potential acquisition targets for consolidators.
