Strategies for Growth - Should I Stay or Should I Grow Now?

Financial Advisory

27 April 2023

AdvisorsConsumer DutyFCAFinancial AdvisoryGrowthIndependent Financial AdviserMeeting of Minds

Expert: Lucy Grier, Benchmark Capital Facilitator: John Chapman


  1. While the number of directly regulated IFA firms has fallen by 5% since 2016, there are still 5,429 firms in the UK
  2. The average age of an adviser is 58, so combined with the number of firms in the market, for those firms looking to grow through acquisition, there is still plenty of opportunity
  3. There are 157 acquirers in the market and 36 of these are backed by private equity, so for those looking to exit, there is plenty of choice

Discussion points:

When considering your exit, think about the right structure for you, your clients and your staff. The options are: asset sale; trade and asset sale; share sale; management buyout and the establishment of an employee ownership trust.

Points to consider for a potential acquirer and how it might impact on your business are: the cost of capital; their preparedness for consumer duty; their client proposition; fee structure alignment; staff remuneration and rewards; their position on DB transfers and their position on self-employed advisers.

What good should look like:
Amongst other things the FCA expect to see demonstration of positive client outcomes. There is no shoe-horning of clients into an investment proposition.

Acquirers need to take a long terms view (5+ years) with joined-up technology and propositions leading to enhanced EBITDA-based valuations.

Areas to prepare your business for sale:
Evidence your client proposition, segmentation, fee structure, CIP and cost base.

Ensure all aspects relating to your regulatory position, risk analysis and data security are all clear and up-to-date.

Simplify and document your operational processes and make the most of your technology. 

Key takeaways:

  • Profit is an outcome not a driver
  • Prepare your business. If you sell, stick around or appoint a successor, prepare your firm in the same way.
  • It takes 3-5 years
  • Make sure you have the right legal representation with experience in FCA regulated transactions.
  • Consider internal succession planning before you look outside the firm.
  • Conduct extensive due diligence on any potential acquirer.