Wealth managers reconsidering strategy during increase in M&A activity

The UK wealth management sector continues to see a wave of consolidation, but recent research from SEI indicates a shift in strategy towards a more intentional and value-centric approach to mergers and acquisitions. According to a study conducted by SEI in collaboration with FoxRed Insight and Solve Partners, there were more M&A transactions in 2024 than in the years 2018, 2019, and 2020 combined. The trend has carried over into 2025, with 35 deals finalized in the first quarter alone, and 77% of firms planning additional acquisitions throughout the year.

While the number of transactions remains high, the underlying motives have evolved. The study reveals a departure from the conventional “buy fast, cut costs” tactic to a more strategic form of consolidation. The primary drivers for acquisitions were centered around achieving growth and scale (75%), expanding geographically (24%), and filling gaps in their offerings (15%). Firms are now placing increased importance on cultural alignment, integration potential, and long-term value creation.

Jim London, the CEO of SEI Investments (Europe) Limited, emphasized the evolving landscape of wealth management mergers, stating that successful firms are those with a clear vision, thorough due diligence, defined integration plans, and measurable objectives. However, despite the eagerness for deals, only 32% of companies reported that their M&A activity had met financial goals. Challenges such as under-resourced and poorly executed integrations were cited as significant barriers, leading 19% of firms to halt further activity in order to consolidate previous acquisitions.

Furthermore, the study found that only 58% of acquiring firms had dedicated integration resources. Interestingly, of those with specialized integration teams, 92% reported achieving financial synergy targets to some extent, as opposed to just 32% of those without such resources. Donald Reid, the founder and non-executive director of Solve Partners, highlighted the shift from impulsive M&A practices to more disciplined strategies, focused on revenue expansion through vertical integration and more precise execution.

Gilly Green, the founder and director of FoxRed Insight, underscored the undervalued aspects of cultural fit and communication in the integration process. Green noted that a lack of attention to culture and communication during mergers can impede organic growth and prolong disruptions. The report, based on a survey of 75 wealth management firms and interviews with 42 senior executives, conducted between October 2024 and March 2025, sheds light on the shifting dynamics within the sector.

In conclusion, the wealth management sector in the UK is witnessing a transformation in the M&A landscape, with firms moving towards more strategic and value-driven consolidation efforts. With a focus on cultural alignment, integration planning, and long-term value creation, successful consolidators are redefining the rules for M&A success in the industry. Adaptation to these changing trends and a more rigorous approach to acquisitions will be crucial for firms looking to navigate the evolving wealth management landscape successfully.