Financial advisers looking to retire and exit the market seemed to have an abundance of choice as to who they sell to but in recent months this has taken a turn.
Speaking on the latest FTAdviser podcast, Paul Morrish, founder of Succession Wealth, said the landscape for sellers has changed.
“It is changing quite subtly but actually if you look at what's driving the changes, it's probably no real surprise,” he said.
“Higher interest rates are making the cost of debt higher for private equity backed acquirers particularly.”
He explained that some acquirers have struggled to integrate their acquisitions, or have chosen not to, and are struggling therefore to drive growth in their profit line.
“So they're forcing price changes to try and drive their revenue up because the markets have been quite flat,” he said.
Morrish explained that different things have been conspiring to make it a very different world than the one we all got used to in the 2015 to 2020 period.
“For example, where markets were generally rising, there was quite a lot competition for most firms, whether they were small, medium, or large. The cost of debt was low so, relatively speaking, nothing really needed to change in that period and it became a bit of a grab of volume according to what someone was looking for,” he said.
“I’d say in the post Liz Truss moment, things have changed quite a lot but often in quite subtle ways.”
Meanwhile, Louise Jeffreys, managing director at Gunner and Co, who was also on the podcast, said she has seen changes depending on the segment or the type of business on sale.
“We're certainly seeing the smaller end of the market finding it a lot harder to find the dream acquirer that they might have been able to in those years where everyone was buying anything,” she said.
“It's harder to make a return on investment and so those smaller businesses are getting left behind.”
She added: “We're talking about single adviser firms who have built this legacy and they've watched all of their colleagues selling their businesses and now perhaps they're coming into a market where they find it's not as easy as they had expected or had seen in the past.”
sonia.rach@ft.com