I don’t mean to frighten anyone but I’ve god a gold id by dose and am currently the sickest I’ve ever been like ever and no-one has ever been sicker than me even if they say they have. It’s not easy being a man you know. But don’t worry, I’ve been in touch with the authorities and North Edinburgh will shortly be on full biohazard lockdown; meanwhile I am coping magnificently and am making sure everyone knows it.
So a shorter than usual Update this week, then, for which we can all be thankful.
A couple of weeks ago I suggested in this hallowed column that we are ready to call the top of the adviser consolidation market, and maybe wider consolidation too. That isn’t to say that it stops, but that the pace of it slows, and secondary deals start to crop up.
I’ll come back to that secondary deal thing in a minute. But first, one of the key things that made me think things might be reaching the peak is that I think we have now transitioned from a buyer’s market to a seller’s one. This is particularly true of IFA firms: there are so many potential purchasers out there that firms can pick and choose. Further up the financial food chain – at least in company size – I think the same is beginning to be true for platforms, providers and software firms too.
This takes a few forms; the most venal of which is obviously playing purchasers off against each other for the highest bid. This is fine of course; and if you’ve got shareholders then it’s hard to pretty tough to resist the highest offer, all other things being equal. But in private companies and with advisers in particular, the ‘shares our values’ driver feels to me like it’s gaining in importance. Rob from Kingmakers made this point in HomeGames the other week; it’s not new but I’m hearing it more and more as perhaps the most crucial factor for firms deciding who to throw their lot in with.
You see it in the messaging from some of the key consolidators – keep your independence, treat your staff well, and most importantly don’t doink your clients. Some even make it clear that they won’t pay the highest multiples – of course, stories abound of when a claimed percentage is nothing of the sort when you get to the end of the earnout period. It’s all a world away from when a highheidyin from a certain well-known provider-owned consolidator used to moan that he couldn’t walk from his office to his car without being accosted by 20 IFAs who wanted to get bought.
Over on the provider side, you can see it in the language around the most recent platform acquisitions – Praemium by Morningstar and Interactive Investor by Abrdn – with talk of ‘shared values’, ‘committed parents’ and ‘long-term view’. Even in bland corporate announcements you can discern little changes of emphasis sometimes.
None of this means that capitalism has gone soft or anything, don’t worry. But if you’re in the market for being acquired, your options have never been greater.
- On that secondary deal thing – Sky broke the potential deal for one of four PE firms to take a stake in the newly combined Nucleus Financial Platforms group; a stake which potentially values the business at a whopping £700m. Epiris has been investing heavily since the acquisition of both JHP and Nucleus, but even so this is quite the premium and a sign of just how much buyers want in.
- An amusingly spiky exchange on executive pay being linked to ESG objectives in this here Citywire video. I suspect this is one of those things where you can make the exchange fit your own views. I’ve certainly made it fit mine…
- Please insert ‘patient capital’ joke here. (paywall)
- Amid all the awfulness of the news these days, advisers are doing really good things. We doff our caps in the direction of Filip, Phil, Shannon, Cameron, Dennis and all who have donated, as well as the countless others who continue to lend their support.
- Mr McPhail’s new Financial Services Unplugged podcat is well worth a listen. It does have our own Steve Nelson on it, but that’s balanced by having Lisa Johnstone from VWM in Glasgow on it too, so there’s at least one person talking sense. Treat yer ears here.
- And your music choice pretty much sold itself this week. Please enjoy Touch Me I’m Sick by Mudhoney and remember to wash your hands for 20 seconds, ideally with bleach.
See you next week, if I make it