Private equity-backed buyers are continuing to fuel consolidation in the UK’s Independent Financial Adviser (IFA) market, despite considerable economic and regulatory headwinds, as a growing number of small firms exit the market.
Research released earlier this year by Opinium found a “clear trend” of smaller IFA firms leaving the market. Opinium data from February 2025 showed that 17 per cent of sole traders in the sector had sold part or all of their business in the preceding year. As of December 2024, Opinium reported, 9 per cent of all IFA firms stated that they had made deals, up from 5 per cent in February 2024 and 6 per cent from September 2024.
At the time, Opinium’s Global Head of Financial Services Research Alexa Nightingale commented: “Smaller adviser firms are clearly leaving the market, whilst the strategic shift towards acquisitions reflects the increasing focus on growth and consolidation across the sector.”
“The rising number of acquisitions is a signal of confidence among larger firms to expand their reach, while smaller firms seek exits or transitions. These trends will shape the future landscape of the IFA sector and its ability to deliver comprehensive services to clients.”
Now, in a new market review, Heligan Group has stated that this consolidation is largely being driven by private equity investors. Activity has remained strong despite persistent economic pressures including high interest rates, tougher financing conditions and greater scrutiny of deal structures, which led to many asset managers facing revenue headwinds.
“Despite these economic and regulatory challenges”, Heligan Group Partner Greg Easter commented, “M&A activity remained robust in 2024, private equity-backed consolidators continued to be key market players, focusing on firms with strong recurring revenue models, scalable operations, and solid earnings quality.”
“The emphasis on efficiency and cost synergies became increasingly important as market participants sought to optimise post-transaction performance and protect against inevitable reduction in future valuation.
Easter continued: “As such, the IFA and wealth management sector continues to exhibit a clear relationship between revenue growth, earnings quality, and enterprise value (EV). Firms with high recurring revenue, superior margins, and scalable operations attract higher valuation multiples, while those with weaker financials face more significant investor scrutiny.”
Easter added that this M&A momentum is set to persist during 2025, albeit “with greater selectivity in pricing and deal structuring", and that IFAs will have to decide whether to pursue a sale, strengthen their internal capabilities or explore strategic partnerships.
Amid ongoing private equity investment, Easter stated, larger companies “will remain aggressive in their expansion strategies, leveraging private capital to acquire and integrate smaller IFAs.”
As a result, even after many years of rapid consolidation in the IFA sector and the wider wealth management industry, it seems that activity may be yet to reach its peak.
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