The latest IFA View survey from financial services consultancy firm Harrison Spence suggested 44.8% of IFAs who own their own practice are looking to exit by 2020.
Plans to exit appear to have been brought forward, as the numbers envisaging they will sell have risen sharply since the survey was carried six months ago.
Then, just over a quarter were planning to sell within the next five years and just 5% within 12 months.
Just over a third of the 230 respondents said they have no plans to sell at all, compared to 57% in April 2014.
“Our experience suggests that this instinct to sell is on the rise, in line with the valuations attached to IFA businesses, which are on a general upwards trajectory as demand outstrips supply,” Harrison Spence managing partner Brian Spence said.
“However, if a glut of firms come to the market over the next five years, prices may fall steeply.”
Ready for sale
Almost half of business owners said they felt that good business practice such as strategy, planning and cost control are likely to have a bigger impact on the value of their business than simple supply and demand (20%) or external factors, such as the cessation of trail (17.5%).
“Increasingly, advisory firm business owners appreciate that rather than sitting back and waiting for the right price, the destiny of their firms is very much in their own hands,” Spence said.
“There are many steps owners can take to ensure that the true worth of their business is reflected in its valuation – and to persuade prospective buyers to pay more than current market value to secure the deal.”
