IDEX Consulting recently sat down with James Salmon, M&A Financial Services Client Solutions Director, to discuss the current state of the M&A market, emerging opportunities for firms, and how leaders can position themselves to secure the best deals. With years of experience in the sector, James offers his insights into the trends shaping 2025 and how businesses can navigate the challenges ahead.
How has the 2025 M&A market performed so far?
The M&A market has seen steady growth, with deal volumes increasing by around 12% year-on-year, marking the highest rise since 2021. This optimism in 2025 has been fuelled by a rush to finalise deals ahead of changes to business asset disposal relief and unexpected capital gains tax hikes.
In 2024, publicly disclosed deal values surged from £2.1 billion to £9.3 billion, and this positive momentum is expected to continue in 2025. Private equity interest in the IFA sector remains strong, alongside investment banks and regional firms aiming for national expansion.
What trends can financial advice firms expect in 2025?
Several key factors are shaping the market this year:
Increased buyout options: Lifestyle IFAs are likely to see more interest in buyout options through share and asset purchase deals.
Regulatory pressures: With the Consumer Duty and new laws driving stricter compliance, firms must adapt to evolving regulations.
Private equity investment: Overseas private equity firms continue to target UK assets, with £7.8 billion worth of acquisitions reported in Q4 2024 by the ONS. PE firms are under pressure to deploy capital, creating a competitive environment.
Technology and AI innovation: Acquiring businesses with AI capabilities offers a fast track to advanced tech adoption. In 2024, enterprise tech deals exceeded $30 billion, driven by PE investment.
Retiring IFA workforce: With 50% of independent advice firm owners planning for retirement, succession planning is a key driver of acquisitions.
Is now a good time to buy or sell?
The market is active, with strong deal volumes and opportunities for both buyers and sellers. Regional buy-and-build strategies remain attractive, offering firms a way to diversify and expand their client offerings.
For sellers, now is an opportune time to explore options. Despite some political and economic uncertainty, many businesses are leveraging economies of scale to drive growth. Consolidators are also becoming more prominent as they near the end of their PE investment cycles, exploring reinvestment and extension opportunities.
What challenges will businesses face throughout the rest of 2025, and how can they prepare?
Talent attraction: Finding skilled professionals in advisory, data, technology, and cybersecurity remains a challenge. Businesses should focus on strengthening their recruitment strategies and employer branding to attract top talent.
FCA’s Change in Control process: Regulatory delays in the Change in Control process are frustrating buyers and sellers, with reviews now taking longer than the standard 60 days. This is particularly challenging for those aiming to complete deals before tax changes take effect.
Consumer Duty impact: Acquisitions now require a more thoughtful approach to onboarding and integration to align with Consumer Duty regulations. Firms that prepare well will find smoother transitions and better ROI.
What opportunities exist for buyers?
Retiring advisors: With the average financial advisor aged 58, many are planning retirement, but only a third have succession plans in place.
Market consolidation: Smaller firms are struggling with compliance costs, tech demands, and talent shortages, driving consolidation. M&A activity in wealth management hit record levels in 2023-2024, with average deal sizes growing from $1.8B AUM in 2022 to $2.3B AUM in 2024.
Growth potential: The global wealth management market is projected to grow at a 9.2% CAGR by 2030. Acquisitions in niche areas like ESG and AI can help firms attract new clients and expand into new markets.
Technology integration: Firms with strong digital platforms see 30-40% higher productivity per advisor. Addressing tech integration challenges early can provide a significant competitive edge.
What opportunities exist for vendors?
The market is currently favourable for sellers, with high demand from consolidators, private equity firms, and larger wealth management organisations.
Buyers are increasingly focused on Consumer Duty compliance, offering vendors greater security for client continuity. This, combined with buyers’ scale, capital, and operational efficiency, creates an attractive proposition for vendors, their teams, and their clients.
How can sellers stand out to buyers?
Plan ahead: Understanding your business’s inner workings and addressing potential challenges early can minimise disruption during integration and improve transaction success.
Conduct a SWOT analysis: Assess your strengths, weaknesses, opportunities, and threats to identify areas for improvement and mitigate risks.
Seek expert advice: Partner with a trusted broker who understands the market and can connect you with the right buyer.
Prepare for due diligence: Anticipate the depth of information buyers will need and ensure you’re ready to provide it.
Define your trade-offs: Know what’s non-negotiable for your clients, team, and long-term goals to find the best match.
Why partner with IDEX M&A?
At IDEX M&A, we take a different approach. As independent advisors, we provide impartial guidance tailored to your values and long-term objectives.
Our focus isn’t just on completing a sale or acquisition, it’s about supporting the financial, lifestyle, and personal goals of everyone involved. With expertise in talent management and marketing, we also help businesses grow post-integration through innovative strategies.
Our M&A team brings over 2-- years of combined experience and a network of 40,000+ businesses. We’ve introduced £14 billion AUA of opportunities across the financial services sector and work with legal, financial, tax, and regulatory specialists to support every stage of a transaction.
For a confidential chat about the M&A market or to explore your options, reach out to James Salmon, our financial services M&A consultant.
