This was not the only M&A news in the fourth quarter of 2022. According to IMAS corporate finance: "M&A activity across the investment sector showed no signs of slowing down in November."
In the wealth management sector, IMAS cited a batch of large acquisitions in November alone:
- Benchmark Capital bought Milton Keynes-based Advison and took a 49 per cent stake in chartered financial planning firm, Chartered Independent.
- AIM-listed Kingswood announced a trio of acquisitions: Strategic Asset Managers, Employee Benefit Solutions and JCH Investment Management for £5.1m, £5.1m and £3.5m respectively.
- Private equity-backed IFA-consolidator Progeny bought chartered financial planning practice Lewis Brownlee Financial Services
- Radiant Financial, sponsored by private equity firm Apiary Capital, acquired Dudley-based TWM.
According to Kenny, this sort of large-scale acquisition - not just private-equity backed but also by consolidators - will continue apace as consolidators have the sort of operational efficiency to bring different brands and systems into one whole entity.
He said: "The big driver for the consolidators is operational efficiency. Adviser firms are generally run by brilliant entrepreneurs, who are strong salespeople with good customer-facing skills.
"Often, they have great business strategies, but often are very inefficient in terms of their operations and tech and systems.
"Large companies and consolidators can bring advice businesses onto the same platform and onto the same operating system, which makes it so much more efficient and cost effective."
Premature
But whether UK consumers will be best served by large, conglomerated entities is another question altogether.
Benjamin Reed-Hurwitz, EMEA research leader at ISS Market Intelligence, commented: "Arguments supporting consolidation are well articulated, and consolidation pressures in the asset management industry typically rise amid weak market and macroeconomic conditions."
He said consumer duty could act as an additional accelerator, but added: "Questions remain whether UK investors will show a preference for these consolidated entities and whether they would be best placed to serve UK investors’ needs.
“Until this is better understood, it may be premature to speculate on how consolidated the UK wealth management business will become.”
simoney.kyriakou@ft.com
