How to prepare for a ‘standout year’ in M&A

According to Steve Prendeville, Forte Asset Solutions founder and director, 2025 has seen him bringing the most businesses to market at the start of the year in his 21 years operating in the financial advice sector, due, in part, to several years of artificial suppression on the marketplace.

“Many people have had to postpone retirements. They had to recover from loss of revenue, grandfathered revenue. They’ve had to build better businesses. They haven’t had the time really to be able to maximise valuations,” Prendeville said on The ifa Show.

“From my side, I’ve started to see a little bit more supply coming on. Yet at the same time, it’s probably the largest amount of demand I’ve ever seen … I think it’ll be a standout year but I think that’ll sort of be coming in to carry through.

“So, I think we’ve been artificially suppressed for a number of years. The Hayne report, COVID, building new businesses, and we’re now just starting to see what I would consider being, coming back in a normal or slightly elevated marketplace on the supply side.”

He added: “Demand is again excessive.”

While the demand for merger and acquisition (M&A) opportunities is high for international private equity companies, Prendeville said that local businesses are also seeking mergers or office-sharing agreements as a means of fostering growth.

“You need size and scale to offset the increasing cost of production or distribution. And so everyone needs size and scale,” he said.

“But then there’s groups that are really looking for growth and instead of using their own balance sheet, if you can use someone else’s, which is capital, then that’s another real sort of kick forward to becoming a billion-dollar plus firm, multi-partner, multidiscipline businesses and then that’ll attract further increased valuations because of that.”

How should businesses prepare to engage in M&A?

Now, Prendeville said, advisers looking to benefit from the high demand need to ensure they have put their business in the best possible position to sell.

“Be the best you can be so that you can attract buyer interest,” he said.

“So, it’s focusing on profitability levels. It’s about building better businesses. It’s hopefully reducing key person risk with having partners. It could be multidisciplinary practices, which means you’re putting more fences around the clients.

“It’s also looking at growth. So, it’s fine to maintain and many businesses are still held in a maintenance position, but what any investor is looking for is growth and the opportunities have never been greater.”

One important factor that investors or buyers will look at is key person risk, Prendeville said, and while it is an investment to bring in a general manager or chief executive, it should be a consideration for businesses looking to thrive in the current growth environment.

“As businesses, we’re like farmers. There’s times to sow and there’s a time to reap. Now is a really good time to sow, to invest because it’s a really, really good environment to actually grow your businesses,” he said.

Furthermore, while providing high-quality financial advice is essential, when looking to engage in M&A, Prendeville said advisers should focus on developing a high-quality business.

“I think that what we’ve got to do is, we’ve got to elevate ourselves from being the best advisers and technical people within the marketplace to also being the best businesspeople that we can be as well,” he said.

“So, focus on the business. Focus on testing the status quo. Reach out a little bit more, you know, get into a little period of discomfort by actually looking for growth, searching for it, looking at your client engagement tools, looking at how AI can come in.

“Building better businesses, to me, is the key.”

To hear more from Steve Prendeville , tune in here.