This time last year, the world was coming to terms with the long-term nature of Covid-19. The first wave was over, as was a crazy summer of beautiful weather, social distancing, mask-wearing and discount dinning.

    And although most service businesses wouldn’t start returning to their offices for many months, their owners’ attention was starting to shift to the medium term. 

    For the people who own financial planning firms in the UK, planning for the medium term often means thinking about succession. The average age is perennially quoted as being somewhere in the 50s and there’s no shortage of column inches devoted to M&A stories.

    To be fair, the number of completed transactions does seem to be higher than in previous years and internal deals are rarely reported in the same way as external ones, so the true figure for the total number of firms where ownership has changed hands could be higher still.

    At Kingmakers, we generally work on about a dozen transactions in a year. The last twelve months it was seventeen.  

    So, assuming there is a greater focus on planning succession and actively transitioning ownership, what are the factors that might be driving it?

    Firstly, the impact of the pandemic cannot be ignored

    It’s a running joke at our firm that every business owner has a three-to-five-year exit plan, and it’s been the same for the last twenty years! What the pandemic did, was stop the crazy world of running a business for long enough for many owners to really take stock. It’s like the hamster’s wheel jamming. The hamster gets off, looks around the cage, gazes out beyond the bars and realises there’s a big wide world out there.  

    The pandemic brought mortality into sharp focus for many. Contemplating one’s lot, became a popular past time.

    It also ushered in the forced adoption of a lot of technology and gave us a glimpse of what life might be like in the future. A lot of change, with associated costs.

    That three-to-five-year exit plan, well, why not sell now, to a firm that’s further down the road with all this change and avoid having to do it all ourselves?

    By the time business owners started thinking about all this, the markets had largely recovered, so the underlying financial performance of their firms was in good shape too.   

    And on the other side of the trade, an increased supply of debt making it possible for ambitious privately owned advice firms and internal teams to acquire, and hungry consolidators looking to deploy capital provided by bullish private equity funds, many of whom are now mid-market in size. A sign of the market maturing.  

    But what does all this mean to you?

    Is now a good time to buy or sell? Are prices high? What are the main differences between the various types of deal?

    In order to try and identify some useful insights - signals if you will - I'll be speaking at Illuminate live this September, where I'm going to review the seventeen deals I worked on in the last year, explore what the owner’s primary intentions were, what they did (and didn’t do), what happened and why, identifying and dismissing the noise in the process.  

    Whether you’re planning your retirement or hoping to take over the firm you work at, there should be some actionable guidance in this session.

    And of course it’s a chance to dress up, travel for business and actually meet in person. Yes, it really has been a crazy year. 

    Book now onto Illuminate live this September, taking place in Glasgow (22nd), Leeds (28th) and London (29th).

    We look forward to seeing you there!

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