The Hunt is On - The Aggressive Pursuit of Financial Services Businesses

We are witnessing a distinct acceleration in acquisition activity across the financial-planning market. Not only are large firms actively seeking growth through acquisitions, but smaller practices are also playing an increasingly proactive role. Those with five advisors, ten advisors or a niche client base are looking to buy or merge in order to grow their book, enhance client service, share infrastructure and lighten the burden of ownership.

Here are some of the key dynamics driving this surge:

1. Broadening participation

Acquisitions are not the realm of the major networks alone. Smaller advisory firms are now actively on the lookout for peer-businesses to acquire, merge with or partner with, in order to scale their presence, deepen their value proposition and spread the fixed-cost burden of compliance, operations and licensing.

2. Core motivations for purchase

Among the frequent motivations we at FI Consult encounter when working with firms are:

• Succession planning – the owner advisor is looking to exit or reduce involvement, and a purchasing firm provides continuity.

• Administrative and operational burden – smaller practices are squeezed by back-office, licensing, regulatory and tech demands.

• Compliance, licensing & infrastructure pressures – the cost and complexity of staying fully compliant is rising.

• Infrastructure sharing – acquiring another business gives access to existing processes, systems, distribution and staff.

• Scale benefits – larger size enables better negotiation, more efficient operations and stronger competitive positioning.

• Cultural fit and client-base alignment – finding the right counterpart means a smoother transaction, whereas mis-fit often means trouble post-deal.

• Fear of falling behind – with growing consolidation in the market, being left isolated becomes a realistic risk.

3. Market consolidation appetite

We are seeing strong appetite for consolidation: numerous enquiries are coming our way from buyers who want introductions to firms willing to sell. Some enquiries are quite advanced (deal terms under negotiation), others earlier (strategy stage). What is clear is that many firms are choosing to buy rather than to build organically.

4. Mergers as a legitimate alternative

Mergers remain a viable route when two or more practices are aligned in vision, client-base and culture. The objective remains the same: scale in pursuit of a shared vision of growth. A merger is not simply an add-on - it is about integration, mindset alignment and intent to grow together.

5. Timing issues and change-management risk

One of the recurring challenges we observe: we’re often called in too late. By the time change-management or cultural issues become visible, the transaction is nearly complete. Early involvement is far more effective. From the moment a firm begins to consider an acquisition or merger it is critical to engage the mindset, manage expectations with staff and clients, and plan for integration. Without this, the risk of post-transaction attrition, culture mismatch or client loss is high.

6. South Africa’s context and regulatory climate

In the South African financial-services sector the drive toward consolidation is reinforced by structural forces: margin compression, rising compliance and regulatory costs, technological disruption and the need for scale to compete.

More broadly, the business-services sector in SA is entering a phase of transformational M&A activity, driven by regulatory change, efficiency-seeking and strategic repositioning.

Within our niche of financial-planning-practice consolidation there is independent research showing increasing focus on succession and retirement-exit pathways in the South African advice industry.

7. Why now?

• Smaller firms realise that if they wait, rising technology, compliance and overhead costs will erode their margins.

• Larger firms are looking to acquire strength in depth (staff, licence, distribution) rather than build from scratch.

• The combination of regulatory complexity, capital intensity and competitive pressure means that scale (or shared scale) is increasingly non-optional.

• For sellers, timing matters – a well-prepared firm with clean systems, a clear security licence, succession in place and aligned culture commands stronger interest and valuation.

8. What role FI Consult plays

At FI Consult we support M&A across the full lifecycle for financial-planning practices (whether buying or selling). Our services include: strategic assessment, target identification, valuation, negotiation, contract review, due-diligence, change-management and post-deal integration.

With over 25 years of experience in this sector, we bring demonstrable success and a pragmatic approach to ensure that every deal supports the long-term goals of the business.We are often engaged to assist in training – covering the philosophy of M&A, how to structure and have conversations, how to pitch and negotiate – and as a result we help firms prepare early rather than just repair late.

Conclusion

Understand the business-cycle stage your practice is in. Are you building, stabilising, transitioning or exiting? Make sure you have a legitimate reason for buying or selling. Clarify your vision: what role does acquisition or merger play in achieving that vision? Approach with discipline. The hunt is on, but remember: it is a long, slow game. Due-diligence must be bilateral – you are as much being acquired (or merging) as acquiring, and cultural fit matters enormously. You are not alone. FI Consult supports you every step of the way.

Just a reminder: in a dynamic market, doing nothing may also be a decision. Being proactive gives you choice.