Mergers and acquisitions surge in IFA sector predicted to persist

The Mergers and Acquisitions (M&A) trend in financial advisory firms is expected to continue as indicated by the Heligan Group. M&A activity among Independent Financial Advisors (IFAs) in the UK has seen a significant uptick, with acquisitions of IFAs nearly doubling from 5% of firms in February 2024 to 9% in December 2024.

This escalation in M&A deals can be attributed to a range of factors, including regulatory pressures like the Consumer Duty requirements and escalating compliance expenses. Moreover, the retirement of seasoned advisors has also contributed to this trend. The increasing presence of private equity investors in the market has been another driving force behind the surge in M&A activity within the sector.

There has been a noticeable rise in the number of private equity-backed firms annually. The year 2025 has, so far, witnessed numerous key transactions, such as Azet Wealth Management’s takeover of Laurus Associates and Titan Wealth’s acquisition of Avisa Wealth.

The competition among buyers has maintained valuation multiples at historically high levels, with firms being valued at 8-10 times earnings. Furthermore, the growth of national-level advisory networks, coupled with secondary buyouts and recapitalizations, is reshaping the industry landscape.

Highlighting the impact of economic challenges on deal dynamics in 2024, Greg Easter, a partner at Heligan Group, noted the influence of inflationary pressures and elevated interest rates on financing conditions. He also mentioned the increased scrutiny on transaction structures due to the mounting cost of leverage. Despite these economic and regulatory challenges, M&A activity remained robust in 2024, with the prominent role played by private equity-backed consolidators focusing on firms with strong recurrent revenue streams, scalable operations, and robust earnings profiles.

Looking forward, Easter anticipates the M&A momentum to persist in 2025, but with more emphasis on prudent pricing and deal structuring. IFAs will need to strategize their next move, whether it involves preparing for a potential sale, reinforcing internal capabilities, or exploring strategic partnerships. With continued influx of private equity investments into the sector, consolidation is unlikely to decelerate. Larger firms are poised to continue with their aggressive growth strategies by leveraging private capital to acquire and amalgamate smaller IFAs.