Revenue type is another critical consideration. Firms generating the majority of their revenue through clearly documented and delivered ongoing service arrangements are viewed as more stable, predictable, and resilient than businesses heavily dependent on transactional income or one-off fees. Strong recurring revenue not only supports valuation models but also provides evidence of enduring client relationships.
The FCA ' s increasing focus on due diligence
The FCA ' s 2025 Multi-Firm Review of consolidation within the financial advice and wealth management sector highlighted the growing importance of effective due diligence.
One of the key messages from the review was that due diligence should never be viewed as a simple compliance exercise or a box-ticking process. The regulator observed that successful acquisitions were characterised by rigorous assessments of risk, thorough investigation of potential liabilities, and mitigation via clear integration planning.
Common issues found during due diligence
Experience from supporting buyers with due diligence shows that many of the issues uncovered are entirely preventable.
Poor record keeping remains a common weakness, as does the inability to provide meaningful management information. Buyers frequently encounter firms that struggle to evidence ongoing reviews, demonstrate training and competence activity, provide documentation of governance meetings, or explain inconsistencies in investment advice approaches.
The frustrating reality for many sellers is that these are rarely issues that emerge overnight. They are usually the result of years of inadequate governance, controls and oversight.
By the time a buyer identifies them, the business owner often finds themselves in a defensive position with limited opportunity to rectify the problem before valuation discussions are impacted.
The FCA also noted‘ good practice’ examples where firms had identified historical advice risks, assessed cultural alignment, reviewed client outcomes, and developed remediation plans before completing acquisitions.
This reflects a broader trend across the market. Buyers are scrutinising firms more deeply than ever before, and the regulator increasingly expects them to do so. Interestingly, the FCA is now challenging firms to confirm that due diligence has been undertaken and to present the risks identified, along with the actions that will be taken to manage them as part of the formal Change in Control application.
Building a saleable business before you need to
Perhaps the biggest mistake firms make is leaving succession and sale planning too late.
" Strong compliance is no longer simply about meeting regulatory requirements. It has become one of the most powerful drivers of business value and saleability."
The most successful exits are rarely the result of a last-minute exercise. They are typically the outcome of years of preparation, where business owners have continuously strengthened operations, improved compliance oversight, developed their client proposition, and reduced key person dependencies.
Whether an owner intends to exit in three, five, or ten years ' time, the principles remain the same: build
10 | The Adviser Online