Welcome to CONNECT
Connect Financial Service Brokers is one of Australia’s leading business broker who specialises in the sales, acquisitions and mergers of financial planning, accounting and risk insurance businesses. Connect provides advisory services for the financial services industry in the following areas:
- Succession planning
- Business growth strategies
- Specific projects
- Business valuations
- Recruitment services
- Business financing
- Expert witness
- Licensing assistance
We work closely with our clients on their journey and understand that every journey is unique therefore personalising our service offering to you. Working in cooperation provides services to business owners, dealer groups, institutions (banks/insurance companies), fund managers and consultants.
A quick snap shot by Paul Tynan, CEO of Connect Financial Service Brokers:
- According to a new report by Pitcher Partners and Mergermarket, in the first half of 2018 there was a 19% increase in the deal value of Australian mergers and acquisitions and a 13% increase in deal volume.
- The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry as well as the establishment of the Financial Adviser Standards and Ethics Authority (FASEA) has seen an increase in the number of baby boomer planners reviewing and bringing forward their succession plans.
- NAB, ANZ and CBA have all announced that they will be divesting their wealth management businesses.
- BT Financial Advice and Macquarie have announced that they will be scrapping grandfathered commissions.
- The Dover demise has highlighted the flaws in the adviser licencing regime – the system is broken and does not favour advisers or clients.
- Individual adviser licensing is gathering steam as advisers continue to leave institutions and dealer groups seeking more independence (a recent Professional Planner poll found that 70% of advisers are in favour of individual licencing).
- The new professional standards legislation requires all existing advisers to complete a bachelor degree or equivalent by January 1, 2024.
- All advisers that are registered as authorised representatives prior to 31 December 2018 will be required to pass an examination before 1 January 2021. The Financial Adviser Standards and Ethics Authority (FASEA) has just released proposed guidance on this Financial Adviser Examination.
- The Financial Adviser Standards and Ethics Authority (FASEA) has proposed that new advisers should complete 1800 hours of work and training. Specifically they will be required to undertake 800 hours of education and training, and 1000 hours of work and supervised experience.
- Banks are tightening their borrowing guidelines around providing finance to purchase Financial Planning and Accounting businesses.
- Within the accounting sector there are many potential sellers of accounting businesses; however, the accountant owners lack the level of confidence and knowledge when initiating the sale or merger process.
The steps needed for a successful outcome are simple – seek professional guidance, do your research and be patient making sure the cultural fit is the key ingredient.
CURRENT MARKETPLACE MULTIPLES
*Please note there are a number of factors that can reduce a business’s value; some of these factors include:
- key person risk
- age of clients
- regional location
- poor compliance
- minority interest
Current Recurring Revenue Multiples
Generally the majority of Accounting and Financial Service businesses that have revenue less than $1,000,000 are valued on a recurring revenue basis. An indication of the recurring revenue multiples based on recently completed sales are as follows:
|Accounting||0.7 – 1.1|
|Financial Planning (fee for service)||2.4 – 3.0|
|Financial Planning Books (C & D clients)||2.0 – 2.5|
|Risk||2.5 – 3.1|
|SMSF Advice||2.5 – 2.8|
|Income Stream||2.0 – 2.5|
|Accumulation||2.2 – 2.8|
|Corporate Super||0.3 – 0.5|
|Mortgage||1.0 – 1.5|
|General Insurance||2.0 – 2.5|
Current Earnings Before Interest Tax (EBIT) Multiples
Generally the majority of Accounting and Financial Service businesses that have revenue in excess of $1,000,000 are valued on an earnings before interest tax (EBIT) basis. An indication of the EBIT multiples based on recently completed sales are as follows:
|Type of Business||Multiple|
|Accounting||3.0 – 4.5|
|Financial Planning (fee for service)||4.5 – 6.0|