• Patrick Isaacss

December 2018 Review

December (as usual) is a less active month for M&A completions with companies gearing down for the Christmas break. The big transaction of the month in the IFA space was Ascot Lloyd’s purchase of £1.3b AUA Newell Palmer. The management team at Ascot Lloyd proving that they have shaken off any stigma attached to the Bellpenny brand by reinventing the business as a pure IFA, focused on purchasing profitable advice businesses of scale. We have seen the emergence of multiple PE backed buyers in the sector each looking to capture the very obvious opportunity within the space. All of which are still looking to secure their first completion - which we expect to see in Q1 2019. SJP acquired Reigate based protection specialist - Future Proof. Curtis Bank purchased £130m Hargrave Hale SIPP book. Discretionary fund manager Brewin Dolphin has bought Basingstoke-based advice firm Aylwin Limited as part of plans to expand its operation in the South East. National advice business Tilney has bought Sutton Coldfield-based IFA Index Wealth Management, adding £243 million of assets under advice.

The question we are most concerned about for early 2019 is whether the geopolitical issues, market volatility, Trump’s overseas trade policy and of course Brexit will affect buyer appetite that will in turn affect values. Every major acquirer in the space is still actively engaged and we have not seen any of the consolidators pull back. There are those that voice caution, but their actions are to press on. There is the ongoing concern over Entrepreneur’s Relief, with the qualifying criteria being tightened in the last budget. There is the ongoing FCA regulatory requirements and concerns over the volume of DB transfers and the impact that inappropriate DB transfers will have on the industry. Robo advice has not gone away as a concept but it’s clear that AI simply isn’t capable currently of replacing average financial advisers let alone good ones. We feel it has a place, but possibly as a complementary service to an existing advice business - perhaps acting as an incubator for smaller clients with human oversight. It certainly isn’t a calm sea for the owners of IFA firms, but the gradual introduction of ever-increasing legislation and the ongoing challenges faced by the industry has created a fleet of SME captains capable of dealing with most eventualities.

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