IFA Business Valuations in the UK: What’s Driving Multiples and How to Maximise Your Value
The UK’s Independent Financial Adviser (IFA) market is changing faster than ever. Consolidation is accelerating, adviser demographics are ageing, and new regulatory demands such as Consumer Duty are reshaping the economics of advice. In this environment, understanding what your business is really worth is no longer optional. It is essential for succession planning, mergers, and attracting investment.
At Lagom Consulting, we help IFA principals and firm owners navigate this evolving landscape with clear, independent business valuations. Our role is to give you a realistic, strategic understanding of value so you can plan exits, negotiate from strength, and maximise the business you have built.
What Is an IFA Business Valuation?
An IFA business valuation is a formal assessment of a firm’s market value based on its financial performance, recurring income, and client relationships. Unlike general small business valuations, IFA valuations focus on the recurring revenue model that underpins long-term value in advice firms.
Core measures include recurring income, EBITDA (earnings before interest, tax, depreciation, and amortisation), assets under advice (AUA), and client retention rates. A strong valuation also captures goodwill: the intangible value created by your brand, reputation, client loyalty, and operational stability.
For regulated businesses, compliance and liability history are also critical. According to guidance from law firm Farrer & Co, the transferability of client relationships and any record of FCA enforcement activity can materially affect valuation outcomes. This is what makes IFA valuations distinct from other sectors: the value of trust, process, and regulatory assurance.
How Are IFA Firms Valued in the UK?
IFA firms are generally valued using three complementary approaches: income-based, asset-based, and market-based methods.
An income-based valuation focuses on the firm’s ability to generate future cash flows. This includes the recurring revenue and EBITDA multiple approaches often used by consolidators and private equity investors.
An asset-based valuation assesses the tangible and intangible assets of the firm, including the client book, brand equity, intellectual property, and technology stack. This provides a floor valuation, with goodwill accounting for the premium above book value.
Finally, a market-based valuation compares your firm against recent transactions in the UK IFA M&A market. Analysis by Gunner & Co shows that buyers typically benchmark deals using both revenue and EBITDA multiples adjusted for size, region, and client demographics.
In practice, most professional valuations blend these approaches to create a defensible figure grounded in financial performance and current market conditions.
| Valuation Method | How It Works | Typical Multiples / Ranges | Best Suited For |
|---|---|---|---|
| Recurring Revenue Method | Applies a multiple to annual recurring income from trail commission and ongoing fees. | 3.5× to 6× recurring income | Smaller firms or retirement-led sales with predictable income streams. |
| EBITDA Multiple Method | Values the firm based on sustainable earnings before interest, tax, depreciation, and amortisation. | 5× to 10× EBITDA, premium firms often 8 to 10× | Larger multi-adviser firms and scalable businesses with strong profitability. |
| Percentage of AUA | Calculates value as a percentage of total assets under advice. | Up to 6% of AUA | Asset-heavy firms with high-value client portfolios. |
Most smaller IFA businesses still sell using the recurring income method, but the EBITDA multiple method has become the standard for larger and more sophisticated transactions. Private equity-backed buyers in particular prefer EBITDA valuations because they prioritise profitability and growth potential over gross revenue.
Factors That Influence the Value of an IFA Business
Several interconnected factors determine whether an IFA firm commands a premium valuation or faces downward pressure. Understanding these drivers allows owners to take targeted action to increase value before approaching the market.
Client Retention and Relationship Strength - Retention is the single strongest value driver. Firms that consistently retain more than 95% of clients and demonstrate diversified relationships across the team achieve higher multiples. Buyers assess whether loyalty sits with the individual adviser or the business itself.
Recurring Revenue Ratio - Firms with at least 50% of income from ongoing fees rather than one-off commissions are seen as more stable and predictable. Research from Dynamic Planner shows that the shift to fee-based models under Consumer Duty has significantly boosted valuations for firms with strong recurring income.
Adviser Dependency - Where most client relationships are tied to a single departing owner, buyers either discount the price or structure deals with deferred consideration to manage risk. Firms with team-based servicing models command better offers.
Client Demographics - The average age of your client base influences value. According to research by Fairstone, client economic value peaks at around age 55 and declines as clients begin decumulation. A younger client profile signals long-term sustainability.
Profitability and Operational Efficiency - High EBITDA margins and lean cost structures attract stronger multiples. Consolidators look for firms that have scalable systems and efficient back-office processes, often supported by modern CRM and client portal technologies.
Compliance and Regulatory Record - Buyers place heavy emphasis on compliance. A clean FCA record and robust audit trail can command a premium, while unresolved legacy advice issues, such as historic DB transfer exposure, can reduce offers or require indemnities.
Brand and Technology - Strong local reputation, client satisfaction scores, and a professional online presence all add intangible value. Technology is increasingly important too: acquirers prefer firms that can integrate seamlessly with their platforms.
Current Market Trends and Average Valuation Multiples
The IFA acquisition market in 2025 remains buoyant but increasingly selective. According to Institutional Asset Manager, private equity-backed consolidators continue to dominate M&A activity, driven by capital inflows and succession pressures among older advisers. Lagom Consulting’s IFA M&A advisory services help firm owners navigate this landscape with confidence, identifying suitable buyers and structuring competitive deals.
Average recurring income multiples have climbed to around 4.2×, up from 3.5× a year earlier, representing the highest levels since 2018. Larger multi-adviser firms with strong profitability are achieving 6× to 10× EBITDA, particularly where they demonstrate scalable infrastructure and a strong management team.
Consolidation remains a defining theme. Around 9% of IFA firms reported acquisitions by the end of 2024, double the level a year earlier. Regulatory clarity post-Consumer Duty and the normalisation of interest rates have helped stabilise deal financing and buyer confidence.
However, the market is becoming more polarised. Buyers are willing to pay premium multiples for well-prepared, compliant, and systemised firms, while poorly documented or adviser-dependent businesses are seeing valuations compress.
How to Increase the Value of Your IFA Firm Before Selling
Preparing for a sale or merger should ideally start three to five years before your target exit. Lagom Consulting regularly advises firm owners on specific actions that can materially increase valuation outcomes. The most effective steps include:
Increase recurring income: Transition clients to ongoing fee arrangements, and document renewal rates carefully.
Diversify client demographics: Target younger clients through digital marketing, referrals, or partnerships to balance ageing portfolios.
Reduce adviser dependency: Introduce multiple relationship managers, centralised CRM systems, and team servicing models.
Strengthen compliance: Commission an independent file review and ensure your audit trails, suitability letters, and complaint logs are watertight.
Modernise technology: Invest in efficient CRM, MI dashboards, and digital client portals to demonstrate operational maturity.
Optimise profitability: Review expenses, automate processes where possible, and normalise EBITDA by removing owner-specific costs.
Prepare documentation: Keep all key contracts, agreements, and HR files up to date. A well-organised data room accelerates due diligence.
Plan for succession: Identify next-generation advisers or managers who can sustain client relationships beyond your departure.
Each of these actions signals stability, scalability, and lower risk — all qualities that drive higher multiples in the eyes of acquirers.
What Buyers Look For in an IFA Acquisition
Buyers in the IFA market, from consolidators to private equity funds, focus on six recurring themes:
Deal readiness – clean, complete, and easily accessible financial and compliance records.
Client retention – a proven track record of stable, long-term relationships.
Compliance – no regulatory red flags or unresolved advice liabilities.
Cultural fit – shared values and investment philosophies that reassure both parties.
Operational scalability – technology and processes that integrate seamlessly into larger platforms.
Growth trajectory – evidence of organic client acquisition or expansion into new services.
As MKC Wealth’s recent acquisition activity shows, buyers increasingly prioritise firms that combine cultural alignment with operational discipline. A well-run, documented business attracts competition, and competition drives price.
The Role of Due Diligence and Deal Structure
Due diligence is where most deals are won or lost. It tests the accuracy of your valuation assumptions and the readiness of your firm to complete a transaction smoothly. Typical due diligence covers four main areas: financial, legal, operational, and regulatory.
According to the British Business Bank’s Due Diligence Checklist, buyers will review client files, revenue stability, compliance history, employment contracts, and IT systems. For mid-sized IFA sales, the process usually lasts six to eight weeks from signing an NDA, though FCA Change of Control approval can extend timelines.
Common Deal Structures
Share Sale: The buyer acquires the company and its liabilities. Sellers often benefit from Business Asset Disposal Relief (10% CGT on gains up to £1m). Buyers seek warranties and indemnities to protect against historic advice risk.
Asset Sale: The buyer purchases specific assets, usually the client book, without inheriting historic liabilities. This route can be tax-inefficient for sellers but reduces buyer risk.
Deferred Consideration: Payment is split over time, typically 50–60% upfront with further tranches after 12–24 months depending on client retention.
Earn-outs: Contingent payments linked to performance targets. These can bridge valuation gaps but require careful governance and clear definitions of success metrics.
Deal structure should always balance risk, tax efficiency, and cash-flow needs. Lagom Consulting advises clients on structuring transactions to maximise net proceeds while maintaining post-sale security.
Why an Independent Valuation Matters
Many firm owners base their expectations on hearsay or outdated comparisons. An independent valuation provides a realistic, evidence-based assessment that prevents disappointment and strengthens negotiation. Lagom Consulting valuations service gives IFA principals a data-backed understanding of what drives market value and how to position their business accordingly.
Independent valuations also support:
Negotiating leverage with buyers and investors.
Succession and tax planning, allowing time to optimise structure and timing.
Strategic improvement, identifying which levers will most effectively increase value.
Credibility, especially for shareholder exits, family succession, or external investment discussions.
Sellers who undertake professional valuations 12–24 months before a transaction often achieve materially higher final consideration because they enter negotiations prepared and informed.
How Lagom Consulting Helps IFA Firms with Valuations and Exits
Lagom Consulting combines deep sector experience with independent, strategic insight. We work with IFA firms across the UK to help them understand, build, and realise business value through:
Comprehensive valuation analysis using recurring income, EBITDA, and discounted cash-flow methodologies.
Market benchmarking based on live data from comparable IFA transactions and current buyer sentiment.
Value enhancement strategy, identifying operational and client-book improvements that yield measurable uplift.
Sale process management, from buyer identification and negotiation to completion.
Deal structure advisory, ensuring the optimal balance between tax efficiency, timing, and risk allocation.
Independent perspective, free from conflicts of interest or tied introductions.
Our objective is simple: to help you achieve the maximum possible value for your business while protecting the continuity of care for your clients.
Conclusion
IFA business valuations in the UK have evolved beyond simple revenue multiples. Buyers now look for firms that combine recurring income, strong compliance, and scalable infrastructure. In today’s market, smaller firms may achieve 3.5× to 6× recurring income, while larger multi-adviser businesses can reach 6× to 10× EBITDA.
Private equity capital and ongoing consolidation continue to support strong valuations, but success depends on preparation, clarity, and professional guidance.
If you are planning a sale, merger, or simply want to benchmark your firm’s value, an independent valuation from Lagom Consulting provides the foundation for better decisions and stronger outcomes.
Frequently Asked Questions
What multiple do IFAs sell for in 2025? - Most smaller firms sell for 3.5–6× recurring income, while larger, profitable firms achieve 6–10× EBITDA. Premium, well-systemised businesses may reach the upper end of this range.
How long does it take to sell an IFA business? - Typically six to eight weeks from NDA to completion (subject to Buyer and Seller both being committed to reaching a deal along with a fully engaged team of supporting professionals), though FCA Change of Control approval can extend this. Preparation is key, firms that enter the market with complete documentation sell faster and at better valuations. Please note, this can vary significantly by case.
Should I choose a share sale or asset sale? - Share sales can be more tax-efficient but expose buyers to historic liabilities. Asset sales protect buyers but often reduce the seller’s net proceeds. The right choice depends on your compliance history and financial objectives.
How can I maximise the value of my firm before selling? - Increase recurring revenue, diversify clients, improve compliance documentation, invest in technology, and prepare succession plans. A professional valuation will highlight which steps deliver the most value for your specific business.