The value of mergers and acquisitions (M&A) amongst financial advice firms increased “significantly” in 2024, despite the number of deals falling slightly year-on-year, a report from NextWealth has found.

Its Consolidators & Aggregators report analysed deals taking place between Q1 2021 and Q1 2025, and stated that M&A activity continued to re-shape the UK financial advice market.

The report found that while the number of publicly announced deals fell from 134 in 2023 to 127 in 2024, the value of deals was significantly higher due to the acquisition of several firms with more than £1bn in assets under administration.

The cost of acquiring firms had doubled since 2021, rising from 3-6x EBIDTA in 2021 to 6-12x in 2024, an upward trend that NextWealth said was likely to continue.

More than 30 private equity firms were invested into financial firms, with this interest from private equity in financial services forecast to remain.

NextWealth’s report profiled 25 acquirers that had made ‘significant’ acquisitions over the past four years, looking at whether firms had in-house capabilities across functions including: platform, fund management, portfolio management, technology and professional services.

It found that 84 per cent of firms had in-house model portfolio services and 68 per cent had an in-house range of funds.

More than half (56 per cent) had in-house technology capabilities, while the same proportion had in-house platforms and 16 per cent had in-house professional services capabilities.

Several firms said their current focus was on upgrading their centralised investment proposition (CIP) and that they were open to working with investment partners to develop in-house fund and portfolio ranges.

“Over the next 12 months we expect the 2024 trend to continue with a slowing in number of deals but the value of deals growing,” commented NextWealth MD, Heather Hopkins.

“A growing number of private equity firms will look to exit positions and we’ll see the rise of consolidation of consolidators. In our interviews with consolidators we consistently heard that firms have a healthy pipeline of acquisition targets, and we expect this trend will continue to re-shape the UK wealth market.

“Acquirers are becoming increasingly vertically integrated offering a range of services to simplify the operating model and improve profit margins. Acquirers are refining their investment proposition to ensure it is competitive and attractive for acquired advisers and their clients.

“These steps towards vertical integration will have a much broader ripple effect across the industry, forcing platforms, asset managers and discretionary fund managers to develop new ways of working with these firms.”

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