According to financial planning business broker Centurion Market Makers (Centurion) managing director Chris Wrightson, the removal of buyer of last resort (BOLR) arrangements will prompt banks to dramatically withdraw their lending.
A drop in funding will effectively remove a significant number of buyers from the market and then "prices will go down," Mr Wrightson told InvestorDaily.
Mr Wrightson believes that owners of small financial planning businesses who are considering selling should look at accelerating the process pre-FOFA if they are to ensure the best possible sale price for their business.
"Between now and 1 July 2013 we will see more transaction activity as retiring vendors bring forward the sale of their client books.
"Our level of buyer and seller inquiry has been trending up all this year, this last quarter is up some 30 per cent on 12 months ago," Mr Wrightson said.
"We think a lot of people will become very reluctant to sell if they see the price fall a lot, even though they have no other option [after June 30].
Centurion has also forecast that post 1 July 2013 transactions may involve the acquisition of the shares in the practice rather than the book of clients.
"Practice owners ought to review their Authorised Representative Agreements to ensure that the ownership of client income rights are well and truly embedded in their agreement, and are the property of their corporate entity," Mr Wrightson said.
Most buyback and BOLR provisions agree to acquire the income rights of a practice for a present value of three times the firm's annual recurrent revenue.
