Fee-based IFA companies are attracting much more interest from firms in the hunt for acquisitions than commission-based advisers, says IMAS.
Olly Laughton-Scott managing principal of IMAS, which advises companies on how to sell their business or acquire others, says lower-end financial services companies are not in demand as firms realise there is no value in consolidating poor quality businesses.
But the current boom in financial markets means high-quality businesses are commanding prices 25-50 per cent higher than 18 months ago. Laughton-Scott says firms are targeting fee-based companies which are increasingly seen as higher-quality businesses.
He says there is greater segmentation in the market, with companies developing tailored offerings for their sector. Top-end firms are also looking to adopt a holistic approach to meet clients’ needs and secure recurring income and high client retention.
IMAS has advised on a hat-trick of recent acquisitions. Opus Consulting Group has been bought by Punter Southall Group, mortgage broker Harmans, has been acquired by R3 Holdings, an affinity insurance company and Edis International has been bought by Northgate Information Solutions.
Laughton-Scott says: “Firms on the acquisition trail have realised that it is very difficult to take a poor quality firm and mould it into something else. Fee-based firms are increasingly seen as superior businesses and are attracting much more interest in the market.”