Research shows IFA businesses are selling quickly despite vendors outnumbering sellers but prices could be peaking.
Consultancy firm Harrison Spence Partnership typically secures sales of IFA practices for at least three times recurring annual revenue, with some buyers offering incentives including up to 25 per cent of income in the first two years following a sale.
Practices with £50,000 to £100,000 in fund-based renewals are particularly attractive to buyers but Harrison Spence says owners of small IFA firms should explore their options for selling because prices may start dipping if they wait.
Many IFA firms are coming to the market as a result of the Retail distribution review but Harrison Spence says advisers are selling for various reasons. Managing partner Brian Spence says: “Many vendors don’t like the direction of the industry, so they’re planning to sell up and leave.”