Buyers probing wealth firms on organic growth

Private equity money has poured into UK wealth management in recent years, but buyers now want firms to show organic growth after a raft of deals, dealmakers in the sector say.
Potential buyers are placing more emphasis on the growth that target companies can generate off their own backs, rather than from striking more bolt-ons, advisors working on deals have said. Wealth managers have raced for scale through M&A, but investors are now looking more favourably on businesses with burgeoning net inflows outside deal activity.
“The industry has been obsessed with size, but not (on) actually realising that the way you create value going forward is having an underlying growth engine that can perpetuate itself, which is not predicated on additional bolt-on acquisitions all the time, because that consumes capital,” said one dealmaker.
Raymond James managing director Edward Griffin, who advised Oaktree on its deal for Close Brothers’ asset management arm, said: “Organic growth is the oxygen of future profits for years to come. That’s really why everyone cares about organic growth, it really fundamentally speaks to the long-term sustainability of the business.”
Buyout shops have flooded into wealth management in recent years. An ageing population in ever-greater need of financial advice, and willing to pay reliable fees to get it, has drawn attention from private equity firms betting they can roll up smaller players together into lucrative businesses.
Managing Director of Gunner & Co, Louise Jeffreys said many firms acquired over the past decade have ageing client bases, with assets naturally falling as people retire, putting pressure on sustainability of revenues and returns on investment.
“At the same time, the pool of high-quality acquisition targets is shrinking following prolonged market consolidation, reducing the reliability of inorganic growth,” she added.
Roughly 45 private equity-backed wealth firms have sprung up to consolidate the sector’s long tail of bolt-on targets, many of whom are older financial advisers looking to sell their business or smaller firms with dated technology.
Buyout shops that were early entrants into the space, such as Cabot Square Capital and Flexpoint Ford, which backs MKC Wealth and AFH respectively, are now gearing up for exits. Metrics such as net inflows, referral pipelines and client engagement are coming under increasing scrutiny, dealmakers say, with buyers looking beyond just assets under management.
The head of financial services, Andrea Bertolini, at private equity firm Inflexion, which invested £100m in new consolidator Absolute Financial Group in 2025, said earlier this year that greater visibility on a company’s organic growth was gaining prominence.
“What we don’t want to build is another ‘me too’ consolidator where you bring a lot of things together, just to add Ebitda” (Earning before Interest, Taxes, Depreciation and Amortization) ,” Bertolini, added.
However, finding “stellar” organic growth in wealth businesses has been harder to come by, according to KPMG’s head of wealth and asset management Neil Connor.
“The lower hanging fruit is always around the 3,000-plus independent financial advisory firms that are looking to get bought out. That’s an easier immediate journey,” Connor said.
Large financial institutions evaluating wealth deals are among those most interested in organic growth, said the dealmaker quoted previously. UK banks, once major players in wealth, are eyeing up deals in the sector again, in search of income streams that are mostly insulated from market fluctuations and clients they can cross sell their existing products to.
“They need to be convinced that it will create additional earnings for them, and that they can grow inline with their own growth ambitions,” the dealmaker said.
Listed firms tend to have a “strong” correlation between new money flows and their price-to-earnings ratio, Griffin said.