The number of buyers looking to acquire financial planning firms has spiked in comparison to this time last year, broking firm Kenyon Prendeville has reported.
Kenyon Prendeville director Steve Prendeville said in excess of 100 new buyers had registered with the group in the last three months of the 2010 calendar year and that the number of businesses at market was currently up from around 13 to 25.
He told delegates at the Association of Financial Advisers National GenXt Roadshow this week that while there was concern around industry reforms that pending legislation was not the main reason behind the rise in sales, despite that it could be motivation for some.
“A lot of people postponed their exit plans during the global financial crisis and the dissolution of partnerships is definitely a component, as is the retraction of one of the man financiers for the financial planning industry,” Prendeville said.
“Vendors are also seeking longer retention and they want to make a deal now so that they are able to transition their business over the coming years so that it’s a smoother process.”
Prendeville said deals were being done in the absence of organic growth, for economies of scale and because some firms had more robust business models than others.
“There has been a substantial increase in book sales of c and d clients as well as some principals look to reduce debt or increase capital to inject back into their business,” he said.
“Those that are looking to buy c and d books however are doing it to provide more opportunity for less senior people within their firms and to be cash flow positive.”
Prendeville said more licensees were supporting firms in making acquisitions through the provision of finance and resources, as well assistance with dealer fees for a period of time.
He added that the key to improving business value was client segmentation because buyers wanted to be able to see all the opportunities within a client base and that the better a vendor was able to articulate what their clients looked like the more confident the buyer would be.
