Home / Life Insurance / Pandemic could spark M&A storm as advisers look for way out: lawyer
13 July 2020
The financial advice industry may be in for a “wave of merger and acquisition (M&A) activity” as the virus disruption continues to stretch advisers’ resources, according to law firm Cornwalls.
“Financial advisory practices are primarily small business operations and are no different to their peers in the broader SME sector recovering firstly from the initial shock of COVID-19 and are now learning to live with the virus,” Partner Dennis Tomaras said.
“In making the most of the situation, considering M&A opportunities is an outcome of the current scenario.
“It’s probably a 50/50 split between those businesses seizing the initiative to merge for survival reasons and those acquiring a practice that will facilitate growth aspirations.”
He says advisers considering M&A moves should do due diligence before making a commitment. These include carrying out “a high level health check” of potential targets and exploring how an acquisition should be carried out.
“You wouldn’t sell your house without making sure it’s ready for inspection and it’s the same in a business deal,” Mr Tomara said. “Acquirers and target entities need to make sure their legal and financial affairs are up to date and that all federal and state tax returns are in order.”