M&A outlook: FCA’s consolidation review unfolding in real time

‘t just been a report – we’ve been seeing it play out in real time during live deals,” she said. “For some acquirers, submitting their business plan and showing how they will integrate and maintain the acquired business has become essential, whereas in the past, it might not have been as thoroughly scrutinized.”

The FCA’s focus on consolidation is creating a shift in the M&A landscape. Hicks noted, “The FCA’s engagement in the M&A space has had an impact on valuations as buyers now have to adjust their offers to account for increased due diligence and separation costs.” This means that buyers need to be more strategic and deliberate in their approach to acquisitions.

Hicks emphasized the importance of understanding the regulatory environment in which financial advice firms operate. She stated, “Ensuring compliance with FCA regulations is crucial, especially in the current climate where regulatory oversight is heightened. Firms that are well-prepared and have robust compliance frameworks in place will have a competitive advantage in the M&A market.”

The consolidation review is not only shaping the M&A landscape but is also influencing the sales process for financial advice firms. Hicks explained, “Sellers are now facing increased scrutiny from prospective buyers who are more concerned about the operational risks and potential regulatory issues of the target business.” This means that sellers need to be transparent and proactive in addressing any compliance or operational issues before entering into a deal.

In light of these changes, Melo’s role has become more critical in guiding financial advice firms through the sales process. Hicks highlighted, “Our focus is on helping firms prepare for the M&A process by ensuring that they have the necessary systems and controls in place to meet regulatory requirements and demonstrate their value to potential acquirers.”

Overall, the FCA’s consolidation review has had a significant impact on the M&A market for financial advice firms. The increased regulatory scrutiny and focus on compliance have reshaped the way deals are conducted and evaluated. Both buyers and sellers need to adapt to these changes by being more diligent in their approach and understanding the regulatory landscape in which they operate. Moving forward, firms that prioritize compliance and transparency will stand out in the M&A market and be better positioned for successful transactions.