The value of acquisitions of financial advice firms rose considerably in 2024 due to an increase in the acquisition of firms with over £1bn in assets under advice.

The cost of acquiring firms has doubled since 2021, despite a slight fall in the number of publicly announced deals in 2024.

There were 127 acquisitions made in 2024 and 134 deals in 2023.

The cost of acquisition has increased from 3x-6x EBITDA in 2021 to 6x-12x EBITDA in 2024, according to consultant NextWealth’s annual report on consolidation.

There are currently over 30 private equity firms investing in financial adviser firms, with private equity interest in financial services set to continue this year.

Heather Hopkins, managing director of NextWealth, said the firm expected the upward trend in valuations for advice firms to continue this year as it expected to see a rise in consolidators themselves consolidating with each other.

She said: “Over the next 12 months we expect the 2024 trend to continue with a slowing in the numbers of deals but the value of deals growing. A growing number of PE firms will look to exit positions and we’ll see the rise of consolidation of consolidators.

"In our interviews with consolidators we consistently heard that firms have a healthy pipeline of acquisition targets and we expect this trend will continue to re-shape the UK wealth market.”

The report also looked in depth into 25 firms who have made significant acquisitions over the last four years.

It found that these acquirers focused on upgrading investment propositions to simplify their operating model and improve profit margins.

The majority (84%) of the 25 acquirers had in-house model portfolio services and 68% had an in-house range of funds. Several stated that their current focus was on upgrading their centralised investment proposition and that they are open to working with investment partners to develop in-house fund and portfolio ranges.

In-house capabilities of 25 profiled acquirers

Source: NextWealth Consolidators and Aggregators Report, 3 April 2025

Ms Hopkins said acquirers becoming more vertically integrated could lead to changes for providers.

She said: “These steps towards vertical integration will have a much broader ripple effect across the industry, forcing platforms, asset managers and DFMs to develop new ways of working with these firms.”