Private Equity

As we all know, Private Equity firms have been increasing their exposure to retail financial services; in particular networks, financial advisers, wealth managers and technology solutions. Why? Because the market has substantial potential and because it is still to some extent a “cottage industry”; ripe for consolidation. And most PE firms have access to low cost loans to facilitate acquisitions.

Having served as a NED at Fairstone Group (which has now acquired about fifty firms) I have to say that in my experience PE will probably enhance the market for owners, staff and client proposition. They bring skill sets that can compliment most Financial Advisers’ mind sets and can delver constructive criticism. However, I have some concerns about the prices PE investors are paying.

Last November I was engaged to help a relatively new PE firm who were considering purchasing an IFA. And I have to say it looked like, and probably is. an excellent business. It’s AUM was less than £5bn, it’s EBITDA was very small.  My client was out bid by another PE firm which paid over £100m for the business. Very interesting engagement from my perspective. I’m glad my guys didn’t buy it.