A new report on consolidators and aggregators finds merger and acquisition activity continues to re-shape the UK financial advice market.
NextWealth’s 3rd annual Consolidators and Aggregators Report is based on analysis of deals taking place between Q1 2021 and Q1 2025. It provides an overview of the market for financial advice business acquisitions, implications for providers and key drivers and trends.
Key points:
- Value of deals is up while the pace of acquisition is down slightly
- More ‘consolidation of consolidators’ to come in 2025
- Acquirers focus on upgrading centralised investment propositions
The report found that although the pace of acquisition fell marginally in 2024, with 127 publicly announced deals compared to 134 in 2023, the value of deals was significantly higher due to the acquisition of several firms with £1bn+ in AUA by acquirers such as Titan Wealth.
It also found the cost of acquiring firms has doubled since 2021, increasing from 3-6x EBIDTA in 2021 to 6-12x in 2024 – an upward trend that is likely to continue.
It confirms that over 30 private equity firms are invested into financial firms and private equity interest in financial services will continue.
Heather Hopkins, MD of NextWealth comments:
“Over the next 12 months we expect the 2024 trend to continue with a slowing in number of deals but the value of deals growing. A growing number of PE firms will look to exit positions and we’ll see the rise of consolidation of consolidators. In our interviews with consolidators we consistently heard that firms have a healthy pipeline of acquisition targets and we expect this trend will continue to re-shape the UK wealth market.”
Acquirers focus on upgrading investment propositions
This year’s report includes profiles of 25 acquirers that have made significant acquisitions over the last four years. Across the profiles NextWealth has analysed whether firms have in-house capabilities across functions including: platform, fund management, portfolio management, technology and professional services.
Across the profiles, NextWealth found 84% of firms had in-house model portfolio services and 68% had an in-house range of funds. Several stated their current focus is on upgrading their centralised investment proposition (CIP) and that they are open to working with investment partners to develop in-house fund and portfolio ranges.
Heather Hopkins, comments:
“Acquirers are becoming increasingly vertically integrated offering a range of services to simplify the operating model and improve profit margins. Acquirers are refining their investment proposition to ensure it is competitive and attractive for acquired advisers and their clients. These steps towards vertical integration will have a much broader ripple effect across the industry, forcing platforms, asset managers and DFMs to develop new ways of working with these firms.”
