What to Consider When Buying or Selling an IFA
The UK’s IFA market is undergoing rapid structural change, with private equity-backed acquisitions, platform consolidation, and adviser exits reshaping the landscape. In 2023, 133 IFA acquisitions were publicly disclosed. By December 2024, 9% of firms had acquired another business—almost double the 5% seen earlier that year. Mergers remain stable at around 5%.
Beneath the headlines lies a structural shift: private equity is reshaping the market through a “buy-and-build” model, where platforms acquire smaller regional IFAs to scale fast. As competition heats up, deal structures are evolving, valuations are diverging, and compliance scrutiny is intensifying. Buyers and sellers alike must approach transactions strategically.
This article outlines the key factors for both sides—covering valuation drivers, deal structuring, compliance risks, post-deal integration, and the strategic alignment needed to make IFA acquisition strategies succeed.
Thinking about buying or selling an IFA firm?
At Lagom Consulting, we work with acquirers, consolidators, and founders to structure successful deals, avoid post-deal headaches, and unlock long-term value. Whether you’re preparing for exit or pursuing growth, our practical, no-nonsense support helps you navigate the complexities of M&A in the UK advice sector.
Market Dynamics: What’s Driving IFA Consolidation?
Macroeconomic pressures, regulation, and adviser demographics are accelerating change. By the end of 2023, the number of IFA firms had fallen 8.1% year-on-year to 4,654. Nearly one in five sole traders (17%) exited or sold all or part of their IFA business in the past 12 months—often due to succession planning or commercial pressures.
It’s not just traditional consolidators leading the charge. Platform providers such as 7IM and Wealthtime are acquiring firms to expand distribution and achieve vertical integration.
Private equity appetite remains strong, though more targeted. While deal volumes dipped slightly in 2024, total deal values rose. Buyers continue to compete for the best-run businesses—those with clean regulatory records, scalable infrastructure, and stable recurring revenues.
IFA Business Valuations: What Moves the Needle?
High demand has kept valuations buoyant. Strong IFA firms typically sell for 8–10x EBITDA, with the best-in-class reaching 10–12x. This is a significant jump from 2021, when 3–6x multiples were the norm. For smaller practices, recurring income multiples are often used instead of EBITDA.
Key IFA business valuation drivers include:
Regulatory Health: A clean FCA record and strong Consumer Duty compliance.
Recurring Revenue: Predictable income streams remain a top priority for buyers.
Client Book Quality: Demographics, longevity, and relationship depth all matter.
Operational Efficiency: Scalable systems and lean teams increase appeal.
Adviser Retention: Low turnover and geographic relevance are critical.
However, rising interest rates and regulatory costs are exerting downward pressure on valuations—widening the gap between premium and average firms
Selling an IFA Business: How to Maximise Exit Value
For owner led IFAs, preparation is everything. Buyers will scrutinise far more than headline revenue. To optimise your sale:
Compliance First: Consumer Duty has raised expectations. Buyers will assess your file reviews, complaints history, and governance. The average firm spent £18,161 on compliance updates in 2023–24.
Client Stability: Longstanding relationships, strong retention, and low attrition rates enhance value. Engagement with younger generations is a bonus.
Recurring Income: Clearly documented, robust charging structures and fee models are essential.
Succession Plans: With 75% of IFAs near retirement age, buyers need assurance of post-sale continuity—either through internal successors or transitional involvement.
Deal Structure Awareness: Share sales are often tax-efficient but carry liability. Asset sales isolate risk but can complicate handovers. Staged exits and earn-outs need careful structuring.
Client Communication: Co-branded messaging and proactive transition planning help maintain trust—critical to preserving value.
Buyer Priorities in IFA Acquisition Strategies
Those looking to buy 1 or multiple IFAs must balance growth ambitions with regulatory, operational, and cultural fit:
Business Model Fit: Know whether the firm is directly authorised, uses discretionary permissions, or outsources compliance. Misalignment here creates friction.
Client Base Compatibility: Only 34% of firms serve clients with portfolios over £250k–£500k. Validate assumptions before progressing.
Technology Stack: Despite 88% of firms using back-office software, integration remains a common pain point. Assess early.
Regulatory Standing: Compliance gaps are costly—and can stall deals. Some larger firms spent £90,000+ on Consumer Duty remediation alone.
Talent Retention: The average firm employs seven people, including three advisers. Key person exits post-deal can undermine ROI. Retention incentives, earn-outs, and cultural due diligence are essential.
IFA Integration: Where Deals Are Won or Lost
Signing the deal is just the start. Value is crystallised—or eroded—during integration.
Cultural Fit: Many buyers adopt a hybrid model—preserving local branding and autonomy while standardising compliance, tech, and operations.
Fee Structures: Aligning propositions across firms is difficult. Clients familiar with one charging model may resist change.
Governance: PE-backed firms must manage growth without triggering FCA concerns. Strong oversight, independent compliance, and clear MI dashboards are vital.
Exit Planning: Most consolidators target trade sales or secondary buyouts, not IPOs. To achieve this, they must drive margin improvements and integration consistency.
Regulatory Pressures When Buying or Selling an IFA
The FCA is closely monitoring IFA consolidation, with concerns about:
Declining advice quality at scale
Inadequate oversight of multi-site adviser networks
Conflicts between growth targets and client-first principles
Poor client communications during ownership transitions
Consumer Duty has raised the bar further, requiring firms to evidence positive outcomes and act where standards fall short. Regulatory credibility is now a make-or-break factor in IFA M&A.
A More Sophisticated, Mature IFA M&A Market
As the market evolves, so does the M&A approach. Buyers are more selective. Deal structures are increasingly nuanced. Shared services and technology investments are key—but only when executed well.
Sellers, for their part, are better prepared—focusing not just on revenue, but on governance, client trust, and operational readiness.
In a maturing market, volume alone no longer delivers success. The firms commanding premium valuations or achieving strong platform growth are those that plan, prepare, and integrate with discipline.
Looking to buy or sell an IFA? We can help.
At Lagom Consulting, we’ve advised consolidators, private equity investors, and founders on IFA M&A across the UK. Whether you’re looking to scale through acquisition or exit on strong terms, we bring deep industry knowledge, commercial rigour, and pragmatic support across the full transaction lifecycle.
We don’t just help with due diligence or compliance reviews—we help you define strategic fit, plan integrations, build succession strategies, and avoid the costly mistakes others make. Our track record spans buy-side and sell-side support, with a particular focus on complex deals, regulatory alignment, and unlocking value in the transition phase.
Who are Lagom Consulting?
At Lagom Consulting, we pride ourselves on being more than marketing and management consultants; we are your strategic allies in building marketing strategies to market into financial services market.
Our ethos centres around delivering first-class service, underpinned by a hands-on approach that melds practical problem-solving with time-tested marketing solutions. We recognise that effective marketing is an ongoing journey, not a one-off exercise. We steer clear of ‘random acts of marketing’, opting instead for a comprehensive and sustained approach.
Working with Lagom Consulting means gaining more than a consultant; it means acquiring a partner committed to your enduring success