Advisers are looking to sell their business now more than ever with 50 per cent of IFAs looking to sell up in the next two years.
Gunner & Co’s annual survey to understand the motivations driving IFA business sales found the key reason to sell was still retirement.
However, this driver dropped by 10 points from last year with regulatory changes emerging as a significant factor.
Louise Jeffreys, managing director of Gunner & Co, said: “This reflects the increasing concern over the operational impact of regulatory changes including consumer duty and the potential introduction of capital and liquidity adequacy.”
In terms of the preferred exit route, business sales continue to be the preferred succession route with 75 per cent of respondents favouring this option, up from 74 per cent in 2023.
Management buyouts remain the second most popular choice at 9 per cent.
Jeffreys added: “The regulator is taking a more active stance in all transactions, especially relating to responsibility for past-advice liability. However, the rate of consolidation in the sector has not abated.
"With the development of the consolidation market, we are likely to witness consolidation among the actual buyers themselves, which to a degree will reduce the buyer market and change the supply and demand curve.”
She added: “Coming to 2024, a more stable and positive stock market reduces the risk of returns on transactions, and in turn make acquisitions more attractive to buyers.
"While some smaller, debt-backed buyers have chosen to pause acquisitions and focus on integration, the major players currently remain as active as ever.”
The most popular choice of buyer was large regional businesses with 66 per cent of respondents stating they would prefer to sell to them.
Small local businesses have overtaken large national consolidators as the second preferred choice this year.
Jeffreys said: “Many large regional businesses have been acquired over the last three years. These businesses often remain more culturally aligned to the business seller, with the added advantage of more proven access to funding.”
According to the report, independence has evolved significantly over the past few years with 76.42 per cent of respondents preferring to remain independent.
alina.khan@ft.com
