External sales

Private equity is eyeing up the financial planning and wealth management space. With clients committed to ongoing fees, high persistency rates, and the sector’s resilience, it’s no wonder they’ve got their eyes on the prize!

Their game plan? “’Buy and build”. Some may be open to buying businesses or client banks of any size, provided they have the infrastructure for seamless integration. In other cases, they may target larger businesses.

For business owners looking to reduce risk, access capital, and fuel growth while maintaining equity or merging into the acquiring firm, private equity is the way to go!

We get it. The phrase “vertical integration” might sound a bit intimidating, with the perception that it will mean clients are moved into a different proposition at any cost. But here’s the deal: not all vertically integrated businesses are the same. So, look beyond the term itself to understand the likely outcome for your clients and staff.

Vertically integrated buyers know a thing or two about acquiring businesses. If they can benefit from multiple income streams, they might just make you an offer you can’t refuse. And if your investment proposition is already aligned, there is potentially less disruption for your clients.

More national and regional firms are growing both organically and through acquisition. These firms often operate on a smaller scale compared to large consolidators, which can work in your favour if you’re seeking a buyer that’s a better fit culturally.

They may also have robust client-facing operations and a brand in your location that is well-respected and of comfort to your clients. While they may not offer sky-high valuations due to their size limitations, this needs to be balanced against the benefits of selling to a firm more closely aligned to yours.

It’s not just the big players, like consolidators or larger firms, who are looking to grow through acquisition. We’re seeing more local firms stepping up to the plate and buying financial services businesses. This could be ideal if you’re looking to sell to a company that shares your values, while also ensuring your clients continue to receive the comfort and continuity of local service.

While local firms may face financial constraints compared to their larger counterparts, transactions can still be personalised to meet your needs. This could include longer-term deal structures to minimise client disruption, providing added comfort.

Ever thought about selling off some assets to streamline your business and ramp up growth? As you know, the MiFID II directive requires business owners to provide an annual suitability assessment, while Consumer Duty focuses  on client communications, service, price and value. It might be time to offload assets or client relationships that don’t work with your service offerings, freeing you to focus on delivering real value where it counts.

It’s a win-win situation. It could give you the right outcome for certain clients, some remuneration, and the ability to streamline your business and focus on growth aligned with your broader plans.

Teamwork truly makes the dream work, especially when businesses unite for success. But there’s lots to consider. Teaming up with a local peer could slash costs and boost efficiency for both parties. It may lead to savings for clients due to a stronger position of negotiation with platforms and providers. And, it might solve recruitment issues.

However, before sealing the deal, there’s a lot to think about, including the value you’re both bringing, who will take those key managerial roles and whether your future objectives are aligned.