KBS - Financial Services and Wealth Management - Market Insight

STRATEGIC INTERESTS OF PRIVATE EQUITY AND INVESTMENT BUYERS IN THE FINANCIAL SERVICES AND WEALTH MANAGEMENT SECTOR PE is a driving force in M&A in this sector, with 88% of UK deals in the first two months of 2025 having been either through direct investment in firms or via their portfolio companies.

Consolidation of the wealth management sector accounted for most of this activity. However, pensions consultancy and the administration market also acquired investments.

Types of Buyers as a % of Total, Announced UK Transactions

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Percentage

15% 7%

11%

12% 11%

13%

16%

26%

11%

29%

15%

24%

18%

28%

15%

88%

26%

54%

62%

45%

44%

31%

2020

2021

2022

2023

2024

YTD 2025

Announced Year

Private Equity

Quoted & Other

Overseas

Privately Held

SOURCE: MarshBerry Proprietary Database and Companies House. Data as of 02/28/25

PE is a dominant player in the wealth management sector due to recurring, fee-based revenue streams where a firm’s fees are based on an AUM structure. This steady cashflow is attractive for acquirers.

Moreover, digital and technological capabilities draw in PE investment. Advanced technologies mean customers will be more inclined to choose a wealth management firm, driving top-line growth and retention.

PE firms are interested in investing into companies that have strong compliance frameworks. Stringent regulations are being introduced worldwide and relevant authorities are focusing on client protection, e.g. the FCA regulates UK wealth management and private banking firms. It is costly to meet these standards, hence companies with already established frameworks or dedicated departments are much more attractive. As a result of the introduction of The Consumer Duty in July 2023, owners of many smaller firms were pressured to sell due to increased compliance costs. Finally, the wealth management sector is quite fragmented. Historically, PE involvement in the UK was based on consolidation and scaling opportunity in a fragmented market. IFAs and wealth models were merged by PE to benefit from economies of scale, meeting compliance and technological costs in a buy-and-build model.