Comprising over 5,000 firms, more than 27,000 advisers, and with a market size of approximately £7.1bn (2023)*, the Independent Financial Adviser (IFA) sector is a core component of the UK’s wider financial services industry.

At the moment we’re witnessing an extraordinary wave of M&A activity in this historically fragmented sector which is affording an array of opportunities for those looking grow or finally exit their business.

In 2024, M&A deal volume across the wider financial services industry increased by a massive 26% to 380 transactions, with disclosed values rising from £12.5bn to £20.2bn. In terms of IFAs, deal values are undoubtedly on the rise, with further evidence of acquisition and consolidation demonstrated by a decline in retail investment advice firms from 6,240 in August 2022 to 5,805 in February 2024.

These trends suggest growing confidence as economic conditions stabilise and with lower interest rates easing financing. Technology, particularly fintech and niche offerings such as digital cashflow modelling tools, is another catalyst as larger IFAs acquire firms with digital capabilities to enhance client offerings.

All this is being driven by a number of other factors:

1) Demographics

Simple demographics has a significant role to play: around 75% of IFAs are nearing retirement, prompting many to sell as part of succession planning (it’s perhaps also worth noting that this is a sector where advisors are particularly keen to leave a lasting legacy by choosing a buyer that will ensure continuity of service for their loyal clients). This has spurred consolidators - firms like Fairstone and Quilter - to acquire smaller practices, leveraging economies of scale to navigate rising compliance costs and technology investments.

2) The Drive For Consolidation

Private equity and debt financing have also ramped up involvement with larger players seeking scale and efficiency. These investors are drawn by recurring revenue models and the sector’s resilience, with firms such as ThinCats projecting significant capital injections - potentially £200 million over three years - into wealth management and IFA businesses.

3) Regulatory Change

Regulatory scrutiny under the Financial Conduct Authority, such as the Consumer Duty rules, adds complexity to this sector, often forcing smaller SMEs to eventually throw in the towel while also hindering new entrants. It is no surprise that this opens the door for larger players to begin an acquisition spree that bolsters their operations.

Over the last five years I have organised funding for a number of Independent Financial Advisers  (IFAs) that were looking to grow their business through acquisition. Unfortunately, many owner-managed IFA businesses are still missing these opportunities and losing out to the larger, PE-backed consolidators because they are simply unaware of the debt available in the market. Meanwhile, those looking to exit often lack the necessary M&A expertise, finding themselves at the mercy of sophisticated buyers who dominate negotiations.

With exceptionally strong buyer appetite and highly motivated sellers, the UK IFA M&A market is poised for continued growth, balancing consolidation with the enduring presence of independent operators. If you'd like to discuss how Shaw & Co can help you sell, buy or fund the growth of a business, please book a meeting here

‍

Dan Martin is Partner Head of Deal Origination at Shaw & Co