Forte Asset Solutions director Steven Prendeville said while buyer demand was also limited during most of 2013, with focus directed internally on the delivery of FOFA compliance requirements, demand returned to the market from December last year.
Mr Prendeville said the imbalance between demand and supply has seen recurring revenue multiples rise to the historical equilibrium of 3 times recurring revenue, up from 2.5 to 2.75.
According to Mr Prendeville, however, August has seen a trickle of sellers return to the market which “may turn a flood as sellers emerge from retention bonuses, grandfathering uncertainty and client retention concerns, and look to capture scarcity premium pricing”.
He said many of the new buyers entering the market are coming from complementary disciplines or industries such as mortgage broking, property and accounting.
Mr Prendeville said these buyers represent not only capital growth but organic growth and real options to not only continue the legacy created by sellers but also to take it to greater heights for staff and, most importantly, clients.
“Many new participants see themselves as disruptors by taking on the banks and accepted business model norms,” he said.
“The new entrants are unencumbered with legacy technology and have great pools of potential clients to deliver advice services to.”
He predicts there will be a “significant practice movement from existing to new licensees when certainty on grandfathering is provided”.
Mr Prendeville said confidence is reflected in the acquisition by Forte of MyDealer, a business assisting practices to select and migrate to the best dealer for their individual needs.
