Private Equity continues to drive strong growth in UK IFA M&A activity through 2025

A recent analysis has revealed a significant increase in mergers and acquisitions (M&A) activity within the Independent Financial Adviser (IFA) sector in the UK in 2024, despite facing various economic and regulatory challenges. The data indicated that acquisitions by IFAs escalated from 5% in February 2024 to 9% in December 2024. The surge in activity was attributed to regulatory pressures, rising compliance costs, and the retirement of older advisers in the industry.

The competitive landscape among acquirers retained high valuation multiples, with top-quality IFAs commanding a valuation of 8-10 times EBITDA. Although the rise in interest rates posed some challenges, firms with robust compliance structures and favorable geographic positioning continued to draw premium valuations.

The driving force behind this surge was primarily private equity, injecting capital into firms and facilitating the formation of nationwide advisory networks. Secondary buyouts and recapitalizations further shaped the market dynamics, contributing to the overall momentum.

Greg Easter, a Partner at Heligan Group, emphasized how economic challenges influenced deal dynamics in 2024. While inflationary pressures eased, heightened interest rates impacted financing conditions, leading to increased scrutiny on transaction structures. Consequently, asset managers encountered revenue challenges as fluctuating equity markets affected assets under management, impacting performance fees and profitability.

Regulatory changes also played a significant role, particularly with the FCA’s Consumer Duty initiative, which drove up compliance costs and necessitated operational adjustments. This forced firms to realign their business models to comply with evolving regulations, adding another layer of complexity to M&A valuations.

Despite the hurdles posed by economic and regulatory factors, M&A activity persisted strongly in 2024. Private equity-backed consolidators remained key players, focusing on firms with sustainable revenue streams, scalable operations, and strong earnings. The emphasis on efficiency and cost synergies became imperative as market participants sought to optimize post-transaction performance and mitigate potential declines in future valuation.

The IFA and wealth management industry showcased a clear correlation between revenue growth, earnings quality, and enterprise value. Firms with high recurring revenue, solid margins, and scalability garnered higher valuation multiples, while those with weaker financials faced heightened investor scrutiny.

Private equity’s continued consolidation efforts in the IFA sector resulted in a growing number of PE-backed firms annually. Notable transactions in 2025 included Azet Wealth Management’s acquisition of Laurus Associates and Titan Wealth’s acquisition of Avisa Wealth, highlighting the sector’s ongoing appetite for consolidation.

Looking forward, M&A momentum is expected to persist in 2025, albeit with increased selectivity in pricing and deal structures. IFAs are advised to navigate this landscape strategically, whether through positioning for sale, enhancing internal capabilities, or exploring strategic partnerships. With PE investments flowing steadily into the sector, consolidation is anticipated to maintain its pace, as larger firms aggressively expand their footprint through acquisitions with the support of private capital. The focus now lies in the volume and pace at which acquisitions will unfold in 2025.