Private equity-driven M&A activity in the IFA sector surged in the UK in 2024, despite economic and regulatory headwinds, with strong valuations expected to sustain momentum into 2025.
M&A activity in the UK Independent Financial Adviser (IFA) sector has remained buoyant, with acquisitions by IFAs nearly doubling from 5% in February 2024 to 9% in December 2024, underpinned by regulatory pressures, increasing compliance costs, and the retirement of aging advisers.
Strong competition among acquirers has kept valuation multiples at historically high levels, with quality IFAs commanding an 8-10x EBITDA valuation. While rising interest rates have introduced some pressure, premium firms with strong compliance frameworks and geographically attractive locations continue to attract top-tier valuations.
According to a market review report by Heligan Group, this surge has largely been driven by private equity, which continues to inject capital into firms, fuelling the growth of national-scale advisory networks, with secondary buyouts and recapitalisations further shaping the market.
Greg Easter, Partner at Heligan Group said, “Persistent economic challenges shaped deal dynamics in 2024. Although inflationary pressures eased, elevated interest rates continued to impact financing conditions, increasing the cost of leverage and leading to greater scrutiny on transaction structures. As a result, asset managers faced revenue headwinds as fluctuating equity markets affected assets under management (AUM), impacting performance fees and overall profitability.”
Regulatory developments also played a key role, with the FCA’s Consumer Duty initiative driving increased compliance costs and operational adjustments, forcing firms to refine business models to align with evolving regulatory expectations, adding further complexity to M&A valuations.
“Despite these economic and regulatory challenges, M&A activity remained robust in 2024, private equity-backed consolidators continued to be key market players, focusing on firms with strong recurring revenue models, scalable operations, and solid earnings quality,” added Easter. “The emphasis on efficiency and cost synergies became increasingly important as market participants sought to optimise post-transaction performance and protect against inevitable reduction in future valuation.
“As such, the IFA and wealth management sector continues to exhibit a clear relationship between revenue growth, earnings quality, and enterprise value (EV). Firms with high recurring revenue, superior margins, and scalable operations attract higher valuation multiples, while those with weaker financials face more significant investor scrutiny.”
Private equity-backed consolidation in the IFA sector has continued to accelerate, with the number of PE-backed firms increasing yearly. Several key transactions have already been completed in 2025, including Azet Wealth Management’s acquisition of Laurus Associates and Titan Wealth’s acquisition of Avisa Wealth, demonstrating the market’s continued appetite for consolidation.
“Looking ahead, M&A momentum will persist into 2025, but with greater selectivity in pricing and deal structuring. The focus for IFAs now will be on how to navigate this landscape – whether that means positioning for sale, strengthening internal capabilities, or exploring strategic partnerships. With PE investment continuing to flow into the sector, consolidation is unlikely to slow down. Larger firms will remain aggressive in their expansion strategies, leveraging private capital to acquire and integrate smaller IFAs.
“Therefore, it is not a question of whether acquisitions will continue, but rather the volume and pace at which they will unfold in 2025”, concluded Easter.
