IFA book value market update
There has been a huge amount of coverage in the press lately about deteriorating values of client banks.
This is total rubbish.
Every sale Retiring IFA has transacted this year commanded at least a 1.5% of assets under management valuation and in some cases much more.
Anyone claiming massive drops in prices is frankly not very good at their job.
Market Update:
Current acquisitions searches include Yorkshire, Lancashire, Bristol, London and West Midlands for various national institutions that are keen to offer 1.5 – 2.5% of assets on a share purchase over 18 month terms and retain locations and staff.
Another client is looking across the North and Midlands valuing at 10 – 14 times EBIT and are keen to acquire strong regional offices.
The general thought is that we are 7 years behind the American market, which is now virtually all DFM based.
Conclusion:
In conclusion, prices are not dropping however there are only a limited amount of opportunities to protect your staff whilst exiting profitably as nobody wants 2 regional offices in the same county.
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I agree Steve, competition for buyers is high out there.
This doesn’t reflect what I am seeing in the market and I’m there now offering on business and trying to find businesses in the North East where there don’t appear to be any.
I agree with your 1.5 x assets, but that is a massive drop on the 3 and 3.25 X we were seeing last year.
Acquirers want profitable business now and I see this as where the value will come after April 2016.
However 10 – 14 x EBITDA would make us worth between £5M and £7M which isn’t right. (yet!)
Furthermore we are seeing the regulator block sales of IFA businesses to DFM’s as they fear the ‘shoehorning’ effect, and this in turn is devaluing businesses who only want to sell on a multiple of asset under management.