Merger and acquisition (M&A) activity in the advice industry has significantly increased on the back of a global economic rebound, broker firms have reported.
“Compared to this time last year, M&A inquiries have increased 100 per cent, while transactions have increased 25 to 30 per cent,” broker firm Centurion Market Makers (Centurion) director Chris Wrightson told InvestorDaily.
He said Victoria, the Australian Capital Territory and Queensland were currently Centurion’s busiest states, and that risk inquiries were up 35 per cent as many financial planning firms still placed great importance on diversifying revenue streams post the onset of the global financial crisis.
Kenyon Prendeville director Alan Kenyon said he too had seen the effects of a recovering market, with many business owners who had deferred the sale of their businesses back on the market and buyers seeking acquisitions in increasing numbers as well.
“The need for revenue diversification, scale and enhanced profitability has never been more evident, particularly given the acceptance by all industry players that further change is again underway,” Kenyon said.
“Financial institutions are particularly endeavouring to make significant acquisitions to protect their turf and take advantage of opportunities on the back of proposed legislative changes.”
Kenyon said the big firms felt the need to get bigger or be acquired.
“For principles, this means changes to dealer ownership and management and potentially the saturation of homogonous advice,” Kenyon said.
“As a result of this we may see significant growth in the number of boutiques or boutique dealers, as independence increasingly becomes a valuable point of difference.”
Kenyon said buyers continued to outnumber sellers as principles sought to enhance and diversify revenue, and increase profitability via acquisitions.
