Considering Your Succession Plan?

Gunner & Co. are dedicated to understanding the evolving landscape of the financial advisory sector. For the fifth year, we at Gunner & Co. are running a survey to understand the motivations driving these sales.

Our survey last year revealed that 50% of IFAs were considering selling their businesses within the next two years, with regulatory changes emerging as a significant factor influencing this decision.

The key driver for sale remains retirement at 56%. This however dropped 10 points from 2023 with regulatory changes emerging as a significant factor, representing 8% of the motivation to sell in the market. “This reflects the increasing concern over the operational impact of regulatory changes including Consumer Duty and the potential introduction of capital and liquidity adequacy.” Louise Jeffreys, managing director of Gunner & Co. said.

In terms of the preferred exit route, business sales continue to be the preferred succession route, with 75% of respondents favouring this option, up from 74% in 2023. Management buy-outs remain the second most popular choice at 9%. Jeffreys commented on the recent regulatory changes on the buyer market “The regulator is taking a more active stance in all transactions, especially relating to responsibility for past-advice liability. However, the rate of consolidation in the sector has not abated. With the development of the consolidation market, we are likely to witness consolidation among the actual buyers themselves, which to a degree will reduce the buyer market and change the supply and demand curve.”

The 2024 survey data revealed that the most popular choice of buyer was large regional businesses, with 66% of respondents stating they would prefer to sell to them. Small local businesses (52%) has overtaken large national consolidators (45%) as the second preferred choice this year.

“Many large regional businesses have been acquired over the last three years. These businesses often remain more culturally aligned to the business seller, with the added advantage of more proven access to funding.” Commented Jeffreys.

The importance of independence has evolved significantly over the past few years. In 2024, 76.42% of respondents prefer to remain independent, up from 70.3% last year. This shift indicates a strategic choice to maintain business models and client relationships aligned with the core values of independence.

When assessing a potential deal, client proposition remains the most important factor in assessing potential deals, with 61% of respondents identifying it as a top priority, with deal price being the second most important factor.

In 2023, the biggest macroeconomic factor impacting the M&A market was the rapid rise in interest rates, with 14 rate rises since December 2022. The calmer macroeconomic environment of 2024 saw more acquirers return to the M&A market. Meanwhile, regulatory changes will become a major factor influencing the market if poorly applied.

The tax changes announced in the last Autumn Budget accelerated the decision-making process for many, pushing some owners to finally take the leap. But what about this year—will we see the same trend continue?

Please spend 2 mins completing this survey. As a thank you for completing our survey, you'll receive Gunner & Co's report and analysis of the findings and get a chance to win a £100 John Lewis gift card.