‘A contact sport’: Advice firms battle for best acquisitions

Two advisers say M&A is becoming a “contact sport” as competition heats up to acquire attractive advice firms, while a lack of new entrants creates roadblocks in organic growth opportunities.

A number of advice firms, such as Integro Private Wealth, Coastal Advice Group, Apt Wealth Partners, and others, have indicated plans to expand their businesses through M&A by the end of the year and into next year.

Apt Wealth, for example, appointed Andrew Dunbar as CEO last week, allowing former CEO James McGregor to focus on the firm’s M&A plans.

Speaking with Money Management following his appointment, Dunbar explained that, with M&A activity expected to ramp up over the coming years, the future of M&A in the advice sector is set to become something of a “contact sport”.

“In other words, it’s competitive. If we don’t do it, someone else is going to do it. If we don’t grab the ball, someone else is going to get in there and grab the ball,” Dunbar said.

“There’s consolidation happening everywhere. Others are recognising that need for scale as well. So, we’re very much of the mindset that if we can find like-minded firms who share our vision for the future, then we’d love to be able to do that together.”

As it stands, Apt currently has four offices across Sydney and Melbourne with some 80 staff, including more than 30 financial advisers, and $3.4 billion in funds under management (FUM). 

Prioritising the cultural fit of M&A prospects, Dunbar said that while it doesn’t have a specific target in terms of staff numbers, he expects the firm will be “doubling in size in the not-too-distant future”.

“To the point of having James in the dedicated role as executive chairman, M&A is a big part of our future strategy as well.
We do want to achieve scale and we recognise the need for scale to invest in [new technology and training new talent],” he said.

“We've got a large pipeline of M&A contacts and James has been able to be proactive in that area over the last 18 months as we’ve transitioned the role. So, there’s some exciting opportunities that we’ll hopefully be able to execute over the next 12 months.”

Meanwhile, Justin Gilmour, managing partner of Integro, told Money Management that the accelerated consolidation seen in the market in recent years is a result of the Hayne royal commission and subsequent regulatory tightening, which have put pressure on the capabilities of smaller practices.

“This has accelerated consolidation, with larger firms acquiring smaller ones to achieve scale, improve governance, and enhance profitability. Mid-market transactions – typically between $2 million and $1 billion – remain particularly active, with valuations favouring businesses that demonstrate recurring revenue, digital capability, and strong client engagement," Gilmour said.

Both firms agreed that technology will have a key role to play in the future of advice, with Gilmour suggesting that practices with integrated digital platforms and fintech solutions are attractive targets for acquirers.

“Looking ahead, we expect M&A activity to remain robust, albeit selective. Firms that invest in compliance, technology, and client experience will be best positioned to attract buyers and command premium valuations.

As the industry evolves toward a more independent, tech-enabled, and client-focused ecosystem, M&A will remain a critical lever for growth, succession planning, and competitive advantage,” Gilmour said.

While the profession continues to struggle with the imbalance between new entrants and an ageing adviser population, Gilmour said that inorganic growth is “often the only way” to source the professional staff needed to grow.

Notably, Integro announced the appointment of Glen Mesch as head of advice and growth earlier this week, positioning him to spearhead a major business development initiative that will support the firm’s national expansion strategy.

With Integro making its first foray onto the east coast earlier this year after forming a strategic partnership with Brisbane-based accounting firm AH Jackson, Integro has set its sights on extending its reach beyond its Western Australia-based roots.

Gilmour said: “The shift toward holistic, client-centric advice models is driving acquisitions that expand service offerings and geographic reach.”

Tips for M&A success

A recent report from Morgan Stanley, The race for relevance fuelling M&A, produced with consultancy Oliver Wyman, suggested that up to one in five (20 per cent) of wealth and asset managers are set to be acquired by 2029.

Assessing recent activity in the sector, the report found there have been more than 200 significant M&A transactions per year since 2022, occurring at twice the pace of the preceding decade.

“Acquisitions in asset and wealth management can be perilous,” the report warned, outlining four key considerations for those looking to engage in the M&A space.

It noted that firms should seek out complementary businesses rather than pure cost-driven deals, assessing their culture, product and geographical fit, for example. Derisking was also identified as a key step in the M&A process, considering the use of long-term distribution contracts or investment management arrangements prior to the sale to reduce client attrition risk.

The report also highlighted the importance of an efficient deal execution process, ensuring firms “act swiftly and decisively” by outlining and agreeing to key deal objectives, for example, and creating open lines of communication between all key stakeholders. 

Once the deal is complete, enacting “ruthless execution of cost and revenue synergies, and conscientious cultural alignment” is crucial to enacting a post-merger integration, it said.