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IMAS in the news: Big adviser buyouts jump pre-RDR as AR numbers slump

Financial Adviser, 03 April 2013

Merger and acquisition activity within the IFA sector has started to pick up from low levels with a corresponding drop in the number of individual authorised representatives across the industry, according to data from Imas Corporate Finance.

While numbers are still small, the mergers and acquisitions consultancy’s latest data on the ownership of advisory firms has shown that deals for firms with a value in excess of £5m rose from one in the third quarter of 2012, to three in the fourth quarter.

A further two deals were made in the final quarter of 2012 for larger firms with a value between £25m and £100m. These five deals marked the highest number of M&A agreements signed in a single quarter since the first three months of 2012.

IMAS Corporate Finance founding partner Olly Laughton-Scott, said: “We saw a pause in merger and acquisition activity in the run-up to the implementation of the RDR, and are now seeing a definite pick-up in activity.”

M&A activity was mirrored by the drop in approved persons within the profession.

IMAS data shows that the number of APs within IFA firms and networks fell by 4 per cent between November and December (from 34,377 to 32,934), and by a further 3 per cent between December and January (falling from 32,934 to 31,810), or a total fall of almost 7.5 per cent.

Mr Laughton-Scott added: “The data shows a significant fall in approved persons numbers during the end of 2012, presumably as people resigned or retired. The subsequent upsurge could be explained by new IFAs entering the market, and others finally passing their exams.”

Kevin Ronaldson, chief executive of national advisory group Bellpenny, said: “We will see many more acquisitions during the course of the year as many realise it is a logical step. With the average age of an adviser being in their late 50s, it’s a natural process for people to look at retiring and selling their businesses. RDR was just the trigger point.”

Chris Gilchrist, director of Somerset-based Fiveways Financial Planning, said: “We recently acquired a firm, are in discussions with others, and I know of a number of advisers who are looking for an way out by selling their businesses.

“Last year, the focus was on qualifications for many advisers, and some didn’t put together a clear client proposition for the post-RDR environment, so we could see more acquisitions over time from smaller firms like ourselves, to larger IFA consolidators.”

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