May 14, 2019
Interest is growing in smaller advice businesses that are being made available for sale, according to Knowledgemaster’s Jim Prigg.
Prigg, whose service proposition to the sector includes acting as an introduction agency for those interested in buying and selling advice businesses, has told Riskinfo there is a large and growing interest in smaller advice business books for sale under $250k of recurring income.
There are a number of factors, according to Prigg, which have contributed to this trend, including:
- Many new advisers have realised they need to generate cash flow quickly. Rather than wait to build their business by organic growth they are considering acquiring immediate cash flow by acquisition
- There are a whole range of planners exiting the larger financial institutions distribution firms – but, those that have decided to remain in the industry need to acquire books of business to sustain their lifestyle
- Many senior advisers are considering selling off low-return client segments and concentrating on their higher fee paying clients in future
- There is a trend of more mature-age advisers not wishing to comply with the proposed FASEA requirements, leading to their decision to liquidate their assets
- Banks and lending institutions have tightened up on financing acquisitions, so those that can self fund at lower price levels are at a distinct advantage
These observations from the KnowledgeMaster founder follow additional comments by business broking firm, Radar Results (see: Advice Business Values in Decline), one of which concluded that a buyer’s market now exists for advice businesses. According to Prigg, good advice businesses still have excellent opportunities for the future. “It really is a good time to buy,” he said.