Selling Your Financial Advisor Business | KBS Corporate

Selling Your Financial Adviser Business

If you are considering selling your IFA business, read through our comprehensive guide on this page to the important steps along the journey and how we can help you to navigate them.

We will discuss the reasons for selling a financial adviser business, the importance of obtaining an accurate valuation of your company and how you can thoroughly prepare for your exit.

Let’s firstly touch upon why IFA business owners decide the time has come to sell their business. This can encompass a readiness to retire, regulatory changes that may render their work more complicated and financial difficulties potentially caused by decreasing revenue streams. We will discuss this in more detail below.

When the decision to exit your business has been finalised, what type of sale do you want to achieve? You could include all the company’s shares, assets and goodwill in the valuation or simply sell the client bank. And do you want a clean break or a phased exit whereby you could continue to work with a reduced number of clients, perhaps for a limited amount of time?

Joining forces with KBS when selling your IFA business can help you to clarify these decisions, putting the groundwork in place to accomplish all your objectives.

How Can I Sell My IFA Business?

Several different options are available to company owners who are looking to sell their financial planning business:

Trade buyers: Companies operating within the financial advisory sector may identify your business as a worthy acquisition which can complement their existing operations, perhaps by way of a different service offering or a new geographical market.

Private equity: In recent years, an increasing number of private equity houses, especially those based in the USA, have been buying UK financial advisory companies and we have strong connections with these types of investors.

Management Buy-Ins/Buy-Outs: If you have senior staff ready and able to take on greater responsibility after your exit, an MBO could be an appealing option. An MBI, meanwhile, is when the acquirer brings in their own leadership team to oversee the company’s operations.

Employee Ownership Trusts: An EOT is established on behalf of, and for the long-term benefit of, the company’s employees. The staff will be incentivised to contribute to the future success of the business – and EOT sales are completely tax-free.

Other alternative routes: These include institutional investors such as pension funds, investment banks, mutual funds, family offices and initial public offerings. Our ability to think outside the box enables us to target these additional buyer types.

It is possible to go it alone with a business sale and/or hire a solicitor/accountant to help you, but there are many factors to consider and the benefits of having expert advisers such as KBS on your side are sizeable.

Key Considerations For Selling A Financial Adviser Business

Selling an IFA business can be a lengthy process, but the rewards will be tangible once it has all been signed, sealed and delivered. It will require thorough preparation, an accurate valuation, auditing due diligence and strong negotiation techniques on the way to a successful completion.

The following steps are of particular importance:

Have a clear goal in mind: What do you specifically want to achieve from selling your company? Whether it’s enough to fund a comfortable retirement, relocation or a new business venture, be sure to know your exact objectives – it will sharpen your focus to strike the ideal transaction for you.

Prepare for the sale: There is no such thing as starting too early when you are preparing to sell your financial planning business. Act upon the advice you would give a client – get all your accounts up to date, streamline processes, minimise costs and ensure the right staff are in the right roles.

 

Defined revenue streams: Recurring revenue streams are a key attraction when it comes to selling your IFA business. If you have a consistent cashflow, acquirers will view that as a solid basis on which to scale up the business, perhaps by combining client banks.

Value your business: Setting a realistic valuation is critical to your chances of achieving a successful sale. We can help you to decide on a target figure that meets your specific requirements for the plans you have in mind and does not price you out of the market.

Evaluate potential buyers: Who is the right fit to drive your company forwards? With our extensive buyer reach, we are perfectly positioned to identify the ideal acquirer who has the financial means and experience to ensure your business remains in good hands.

Negotiate the final settlement: Again, this is something at which we are proven experts in helping business owners. An acquirer is sure to have their own ideas about how they want the final deal to look and having us in your corner will boost your negotiating power.

Why Sell Your IFA Business?

As mentioned above, there are various reasons why business owners choose to sell their financial advisory company.

Although personal circumstances often drive the decision, it can also be influenced by professional factors such as rising insurance costs, increased regulation, compliance, expenditure associated with the Financial Services Compensation Scheme and increased administrative overheads.

However, the decision to sell your business does not have to be a reactive one in response to financial or legislative pressures. You can be proactive by weighing up the prevailing demand for companies offering sound financial advice as market conditions may be indicating this is the perfect moment to sell.

Should you establish that it is the right time to proceed, you will need to ensure that when the sale goes through, the transition is seamless. Your clients will not countenance any drop-off in the service your company provides and once the handover is publicly disclosed upon completion, it will naturally need to be presented as a positive piece of business for all parties.

Valuing Your Financial Adviser Business

We referred above to striking the right balance for the valuation of your IFA business, but how should that be calculated? It is not a matter of guesswork or plucking a figure out of the air.

The valuation could be based on your recurring revenue or the profitability of your company, known as the EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation).

Other factors that can influence the valuation are the company’s location, reputation, client profile, fee structure and retention levels.

Payment Terms When Selling A Financial Adviser Business

In recent years, due to the increasing market interest in acquiring IFA companies, the trend has become for business buyers to pay a greater proportion of the purchase price up front. Typically, anywhere between 50% and 75% of the agreed sale price will be paid up front in cash.

The remainder would be deferred, paid at a later date and unconditional – although, unless some form of security was put in place, it would be at risk if the business became insolvent.

Another option is an earnout, which is related to the company’s performance and usually applies when the seller continues to run the business on the buyer’s behalf for a certain length of time.

Common Legal Issues When Selling A Financial Adviser Business

Legal issues when selling an IFA business are generally in line with those encountered in any other type of business, namely:

  • Due diligence – read our detailed guide here
  • Negotiating and drafting the Heads of Terms and final sale agreement
  • Warranties and indemnities
  • Property law matters, in relation to whether the business premises are owned or commercially leased
  • Employment law matters, such as TUPE which stands for Transfer of Undertakings (Protection of Employment) for staff being switched from one employer to another
  • Data protection and intellectual property
  • Tax-related aspects – read our detailed guide here

Should you require help with any of these matters, we can put you in touch with one of our designated legal partners as part of the complete business sales service we provide.

Expert Support Selling A Financial Adviser Business

KBS has succeeded in selling financial planning businesses for 25 years. Providing a bespoke, tailored service for every individual transaction, our team of experts utilises their experience, technical knowledge and network of contacts to negotiate the best possible deal for you.

Contact us to find out more about how we can deliver the sale of your IFA business and fulfil all your objectives.

RECENT BUSINESS SALES IN THE FINANCE SECTOR

X
Completed Sale

Davidson Deem Ltd

Davidson Deem Ltd has been sold to a European wealth management firm, with KBS Corporate Associate Director Matthew Sibley advising throughout the transaction.

Led by directors Peter Stokes and Brian Keane, Davidson Deem provides mortgage brokerage services across the UK.

The Dorset-based firm has secured mortgages since 1989, benefiting from a team of qualified, impartial advisers with a proven track record of success.

Peter Stokes and Brian Keane were ready to explore the M&A market, looking to expand under the impetus of new ownership.

Matthew Sibley said: “Peter and Brian have built a great business with strong financials and a large client base.

“KBS has a dedicated outreach team that can find the right buyers and Davidson Deem was an attractive opportunity to approach prospective acquirers with.”

Lumin Wealth, part of Swiss financial provider VZ Group, has acquired Davidson Deem as a step in its long-term strategy to grow in the UK’s mortgage industry.

Utilising offices in London, Cambridge and St Albans, Lumin Wealth manages client assets valued at over £1billion.

“Lumin has identified Davidson Deem as the ideal platform from which to build its own mortgage network,” added Matthew Sibley.

“Peter and Brian have seen a great opportunity to grow with Lumin by upselling and cross-selling services across Europe, while offering further solutions to their own client base in the UK.”

Commenting on the sale, Peter Stokes said: “Over the past 12 months, we have carefully ensured this transition is seamless for our clients.

“Not only will they continue to have access to our mortgage services but they can also benefit from Lumin’s complete range of financial solutions, which spans everything from pensions and investments to retirement planning and protection.”

Davidson Deem was supported during the transaction by Leilah Ashurst of Nexus Solicitors. Matthew Sibley added: “I’m very happy with the outcome. I’m glad Peter and Brian have been provided with such a strong future for Davidson Deem — it will be a great acquisition for both parties.”

acquired by

Davidson Deem Ltd
Sector: Financial Services
Location: Dorset
Buyer: Lumin Wealth

 

Ready to talk about your business requirements?

Give us a call on
+44 (0) 161 258 0118 or contact us now to get started.

Completed Sale
acquired by
Davidson Deem Ltd

Sector: Financial Services
Location: Dorset
Buyer: Lumin Wealth

X
Completed Sale

InEvexco Ltd

Jay Singh, KBS Corporate Finance Director, has successfully advised on the sale of InEvexco Limited to AssuredPartners — a leading insurance broker with an international portfolio. 

InEvexco was founded in 2011 and, over the course of a decade, has established itself as a market-leading insurance specialist for the events industry. 

The Kent-based business offers insurance services for contractors, organisers and exhibitors, as well as via the Affinity Partnerships service for companies looking for added value for their own client bases. 

InEvexco Managing Director Mark Clayton instructed KBS on the sale of the company as part of his wider retirement plans. Richard Stocks, Senior Research Analyst at KBS, was excited to present the opportunity to the wider insurance industry, owing to the high levels of M&A activity in the market and strong valuation multiples. 

“This is a sector in which we’ve done a number of deals over the last couple of years, including Ravenhall, A-Plan Group and Channing Lucas & Partners,” said Richard. 

“There are several private equity-backed consolidators in the marketplace, as well as overseas companies looking to expand in the UK. 

“Having worked on deals in this sector previously, I was very familiar with the buyers we should be speaking to. The insurance broker space is the most active market for M&A and where we see amongst the highest multiples paid.” 

AssuredPartners was successfully approached by KBS, having been recognised as an active acquirer seeking niche brokers with sector specialism. 

Founded in 2011, AssuredPartners — the 11th largest insurance broker in the US with revenues of over $1billion — is now investing in firms across the UK and Ireland as part of its international growth strategy. 

Mark Clayton is confident the relationship with AssuredPartners will fulfil InEvexco’s long-term potential. 

“Deciding to sell is never an easy decision, but we knew from the beginning that working with AssuredPartners gave us a great opportunity to achieve our long-term goals,” said Mark. 

“InEvexco has enjoyed success because we made it our business to understand our clients and the industry inside out.  

“With the team staying in place and the wider resources available at group level, I firmly believe the company is well positioned to continue expanding in the years ahead.” 

Richard Stocks is satisfied with the outcome of the deal and eager to explore future transactions in the insurance broker M&A market. 

“This is now a space in which KBS is well connected with acquisitive parties and we have proven we can generate significant interest in high-quality brokerage companies and drive returns for exiting shareholders,” said Richard.

Jay Singh added: “We have built close relationships with buyers and are able to present businesses to appropriate parties, from small firms through to larger and specialist brokers. Our experience and expertise ensures we are able to generate a swift and competitive process, while maximising shareholder value.”

acquired by

InEvexco Ltd
Sector: Insurance Brokerage
Location: Kent
Buyer: AssuredPartners

 

Ready to talk about your business requirements?

Give us a call on
+44 (0) 161 258 0118 or contact us now to get started.

Completed Sale
acquired by
InEvexco Ltd

Sector: Insurance Brokerage
Location: Kent
Buyer: AssuredPartners

X
Completed Sale

AVA Insure Ltd

KBS has successfully overseen the sale of AVA Insure, which generated significant interest in the wider insurance industry before being acquired by A-Plan Holdings.

London-based AVA Insure has achieved considerable growth since its inception in 2013, developing a comprehensive range of home, commercial, property and fleet insurance services.

Existing shareholders Ugur Can and Mehmet Cicek instructed KBS on the sale of AVA Insure, looking to grow under the impetus of a larger entity while retaining the current workforce. Associate Director Fabio Rambelli advised throughout the process, utilising KBS’s network to target trade buyers on a national scale and reach over 50 interested parties.

A-Plan Holdings has integrated AVA Insure into the Aston Lark Group to enhance its growing insurance portfolio. The acquisition is part of the Aston Lark Group’s continued expansion strategy, with over 75 regional locations now established across the UK and Ireland.

acquired by

AVA Insure Ltd
Sector: Insurance
Location: London
Buyer: A-Plan Holdings

 

Ready to talk about your business requirements?

Give us a call on
+44 (0) 161 258 0118 or contact us now to get started.

Completed Sale
acquired by
AVA Insure Ltd

Sector: Insurance
Location: London
Buyer: A-Plan Holdings

Speak to our expert team on 0161 258 0118 to arrange a consultation

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