More advisory practices will look to merge or make acquisitions in 2010, business broker Kenyon Prendeville has predicted.
“I think the outlook for the merger and acquisition market going forward is very optimistic,” Kenyon Prendeville director Alan Kenyon told InvestorDaily.
“Most principals will come to grips with legislative changes one way or the other and I believe that more businesses will look to merge or make acquisitions so that they can become of significant size, to better cope with changes and to gain greater economies of scale.”
Kenyon said the industry had come to terms with the fact that there was life after the global financial crisis and that there were millions of Australians still seeking good advice.
He said that more financial planning practices would look to acquire or merge with businesses that would offer alternative income streams as the global financial crisis had proven that there were benefits to having more than one source of revenue.
“Medium to large businesses particularly will look to broaden their revenue and bolster economies of scale through merging with or acquiring businesses that specialise in accounting, risk, self managed super fund administration or mortgages,” Kenyon said.
With 1800 buyers registered with Kenyon Prendeville, including 120 which were added last year, Kenyon said it was likely to remain a sellers’ market at least for the next three years.
He said he expected merger and acquisition growth in Western Australia to be quite significant and that there was also opportunity for practices that had offices located in more than one state to expand and become national operations.
“I think there will be increased interest in businesses that cater to niche markets, such as corporates and credit unions, and I think we’ll see more people make transactions through acquiring minority shareholdings to avoid financing significant money up front,” he said.
