Seizing the Opportunity for Growth: to buy or to build (Inorganic vs Organic growth)?

Financial Advisory

24 November 2022

Advisory DistributorsFinancial AdvisoryIndependent Financial AdviserM&AMarket TrendsOrganic GrowthTechnology

Expert: John Chapman: Catalyst Partners Ltd Facilitator: Roderic Rennison: Catalyst Partners Ltd


  1. M&A activity in relation to financial planning firms/IFAs has increased significantly over recent years
  2. The level of involvement by Private Equity firms has increased significantly
  3. Organic and inorganic growth need to work effectively in tandem with each other to deliver the acquirer’s financial objectives 


The main reasons that are driving M&A activity:

  • It is a huge market: Retail investments total circa £1.9Triillion
  • The market is fragmented: 89% of firms have five or fewer advisers
  • The market is growing at 8% per annum over the medium term.
  • Since RDR, the level of professionalism, profitability, and size of individual investor have all improved/increased
  • The access to clients is increasingly via financial planning firms/IFAs whilst investment managers and product providers have become more remote from clients

There are now over 35 PE backed consolidators in the market making acquisitions, or which 24 are US based.

The attraction for US firms is the lower multiples in the UK to acquire firms, compared to the States.

Increased interest rates may lead to a slowdown in new PE backed entrants.

Increased interest rates are likely to lead to it being more challenging to raise debt, and so a slowdown in the number of new consolidators entering the market is likely.                                                                                                                                 

The key success factors for buyers have become evident. These include:

  • Effective integration processes
  • Client retention
  • Retaining and developing advisers
  • Effective back-office systems 

Key takeaways:

  • Organic and inorganic growth are symbiotic
  • Organic growth is most likely to be achieved effectively when the following elements work well:
  • Marketing and business development
  • Technology
  • Adviser recruitment and retention
  • Staff recruitment and retention
  • Professional connections are good introducers
  • Getting the timing right for these activities will also impact on the level of success achieved