LAKE OSWEGO, OR -- FP Transitions, one of the country’s largest M&A consultants for financial advisors, announces the release of its 2020 Mid-Year Market Review. In the video report, CEO Brad Bueermann gives an inside look at the firm’s advisory M&A data and compares it to industry projections made early in the pandemic.
“In contrast to the negative predictions made by pundits and industry insiders back in April, we witnessed the resilience of the industry and predicted the exact opposite. We closed Q2 with roughly $43 million in total deal volume representing an aggregate AUM transfer of $1.73 billion, exceeding our expectations by almost 18%,” said FP Transitions’ Brad Bueermann. “2019 ended on a high note, and we saw that robustness continue all the way through the first and second quarters of 2020.”
When the Covid-19 pandemic hit in March, Bueermann reflected on the 2008–2009 recession and how it affected financial services businesses. “We recalled the strength of advisory practices during that time and predicted a more promising future,” said Bueermann. “In fact, we closed all of the 17 deals we had in-process at the end of the first quarter, and they all closed on time.”
In addition to a steady pipeline of advisory practices for sale and a solid number of qualified buyers vying to purchase them, Bueermann said the types of transactions from the past six months ran a broad spectrum. “Practice values ranged from $1 million to $14 million, with most sellers looking for a way to de-risk their ownership investment while continuing to work in the business.” FP Transitions saw a significant increase in the use of the Sell and Stay® strategy, where a seller remains in the business as a key advisor to the new management team for a period of time. According to Bueermann, transactions utilizing a Sell and Stay® approach increased from 30% in 2019 to well over 60% during the last six months, and he believes that trend will continue.
Bueermann’s predictions for the next two quarters of 2020 remain optimistic. “Pricing has stayed solid, with no huge rises or falls, and we expect business values to stay consistent.” He also stated that market multiples have held up well during all of 2020 and buyer demand continues to increase. FP Transitions projects 22 transactions totaling $35 million in deal volume for Q3, and 16 transactions with total deal volume of $30 million for Q4. “If our projections are correct, 2020 could outperform 2019.”
About FP Transitions
FP Transitions is the nation’s leading business consulting firm dedicated to independent wealth advisory businesses. Since 1999, FP Transitions has completed more financial services transactions than any investment banker or business broker in the country. With core services in advisory M&A and enterprise development, FP Transitions provides comprehensive solutions to financial services businesses using a concierge approach. Visit fptransitions.com for more information.