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Standard Life and Old Mutual reveal how they acquire advice firms

In the wake of our cover story on acquisitions this week, the bosses of two major brands reveal how they pick and value their adviser targets

Standard Life’s Strategy

1825 chief executive Steve Murray

We value firms based on range of metrics which differ for every firm as no two firms are alike. The key metrics used for valuing firms are assets under advice, recurring revenue and profitability. We don’t have any standard multipliers – each deal is considered on its own merits, and we spend a considerable amount of time with a business before we reach a valuation. We have found the firms we are attracted to tend to have similar qualities so we don’t see large variations in the valuations multiples.

How do we make it work? Planning, and a cautious approach! 1825 are attracted to businesses with a similar culture to our own, so we are looking for firms with a client-centric approach and we want to hear them talk about their clients relationships with passion and enthusiasm. This has to be coupled with a commitment to their people. The transition approach for both staff and clients is planned and communicated carefully to ensure we can continue to deliver a quality service and products to our clients. We work closely with the management teams in each regional office, tailoring the process according the needs of the staff and clients. It’s an on-going process that doesn’t stop on day one. Like valuations, no two transition plans will look the same.

Steve Murray is chief executive of Standard Life restricted advice arm 1825

Are advisers getting fair value for selling up?

The Old Mutual Model

Managing director at Old Mutual Wealth Private Client Advisers Nigel Speirs

We want to build Old Mutual Wealth Private Client Advisers into a successful business offering high-net-worth clients access to a holistic financial planning experience under a recognised brand.

To achieve that, we have acquired a number of regional offices to allow us to build a presence across the UK. We typically acquire the business in its entirety, with advisers, principals and other staff joining Old Mutual Wealth Private Clients Advisers.

This has allowed us to build a financial planning business with a huge bank of talent, experience and skill. As a result, the majority of business-owners, staff and advisers join us on acquisition and share our vision to grow this business. Where we acquire a client bank from an adviser exiting the industry, we apply a non-compete clause to protect the value of the acquisition.

Because we are aiming to build a business that combines the strength and experience of numerous regional firms into under a single business, with advisers and business principals across the country coming together under Old Mutual Wealth Private Client Advisers, we believe it is appropriate for each firm we acquire to do so on equitable terms. We acquire all businesses for an initial and deferred consideration linked to their assets under advice, and the valuation methodology is always applied equally to each business we acquire.

Nigel Speirs is managing director at Old Mutual Wealth Private Client Advisers

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