Limited Supply for Advice M&A Market

Demand for advice businesses greatly outweighs supply according to experts in the advice M&A space, with relatively few advice businesses looking to leave the industry.

With a net loss of over 10,000 advisers since the start of 2019, Forte Asset Solutions director Steve Prendeville says surging demand is counter-intuitive to what many were expecting in 2022.

“Supply is still low on a historical basis,” Prendeville says. “[Potential sellers] must have thought there was going to be a heavy supply and that must have had a relatively devastating impact of valuations.”

The reality is the vast majority of industry departures didn’t have a business worth selling or one to sell at all, so there has not been a “flood of businesses” looking to sell.

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They were salaried bank advisers, accountants operating under exemptions, businesses under $400,000 [in revenue] or exposed to grandfathered revenue,” Prendeville says.

The FASEA regime has been a contributing factor according to research from Growth Focus, which found 15 to 20 per cent of businesses cited the education standards as a reason to sell.

“It’s certainly not a tsunami,” Growth Focus managing director Steve Fine says. “It’s not the mass exodus many have predicted.”