John Birt, principal of M&A consultancy firm Radar Results, has become aware of the grandfathering issue currently facing planners, and expects to see a change in legislation.
Not only is the legislation anti-competitive, but Birt says it will definitely affect the value of planning firms trying to sell under this legislation.
Advisers will have to look at selling within their own licensee to maintain the value from grandfathered benefits. This will drastically limit the number of potential buyers for a business.
“It’s a supply and demand scenario and with a lot fewer buyers, the price will be affected adversely, says Birt. “In some boutique Licensee groups where there's only a handful of ARs, there may be no buyers at all for that client register.”
However, the issue is not only affecting the smaller firms, with Birt saying institutions who have budgeted to acquire a large number of client registers in order to grow their own advisory networks, will also suffer.
During the past 12 months he says there has been a large demand for non-institutional client registers by these institutionally aligned advisers. Radar Results says the prices have been considered good, but that is likely to change.
There is a bright light for some advisers. Those that escape the legislation are advisers that have risk-only insurance businesses, fee-for-service businesses, accounting fees and SMSF fee businesses.
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