Culture, Not Consolidators, Is What Really Matters in IFA Deals

In a thought-provoking article entitled “We want a club of IFA directors who reject consolidators”, James Connor makes a compelling case for independence in the financial advice sector.??

It’s a rallying cry, the sort of thing that conjures images of David squaring up to Goliath with a sling in one hand and a client book in the other.??

But while Connor’s heart is in the right place, I’d argue the focus is a little misplaced. It’s not consolidators we should be rejecting, it’s cultural mismatches.? ?

This might sound like splitting hairs, but it’s not.??

Some of the best deals I’ve seen, deals that leave clients, staff, and sellers smiling, have involved larger firms. Consolidators aren’t inherently the problem.??

The real issue is when a buyer and seller are miles apart in how they think, operate, and take care of their clients.??

It’s like trying to get a fish to ride a bike; it just doesn’t work.? ?

Why Size Doesn’t Matter (As Much as You Think)? ?

There’s a tendency to frame this debate as small versus big, local versus national. You know the story: the small, scrappy local firm is seen as the good guy, while the big, faceless consolidator is the villain, ready to swoop in and corporate-ize everything.??

But the reality isn’t that simple.? ? Take a consolidator who sweeps in with a big cheque and a slick ‘nothing will change’ mantra, but no understanding of what makes the acquired firm tick. Disaster, right???

Now take a local buyer who’s earnest but clueless about compliance, client retention, or, frankly, running a business let alone acquiring one. That’s just as bad.??

The problem in both cases isn’t size, it’s that neither buyer bothered to figure out how to make the cultures fit, and the seller let their opinion trump their experience.? ? When a deal works, it’s because the buyer respects the soul of the firm they’re buying. Whether that buyer has a local postcode, or a multi-national footprint is, frankly, beside the point.? ?

Cash and Culture: The Odd Couple? ?

Let’s talk about cash. It’s the headline that grabs everyone’s attention in M&A deals, particularly journalists. Let’s not pretend it’s not important, after all, we all have mortgages, children, divorces(s) or perhaps a questionable fondness for expensive holidays to support.??

But here’s the thing: cash without cultural fit is like putting all your money into a yacht and forgetting you don’t know how to sail and no one’s going to show you. It’s not going to end well, is it.? ?

The best deals we’ve seen balance cash and culture.??

They respect what’s already working whilst planning for what comes next. And yes, consolidators can get this right. But so can regional firms and some local buyers.??

The trick isn’t to dismiss one type of buyer outright but to ensure you’re partnering with someone who “gets it.”? ?

Tales of Triumph and Tragedy? ?

Some of the worst deals we’ve seen involve small firms trying to buy other small firms. These are the DIY disasters of the M&A world - heartfelt but woefully underprepared.??

Think of two people trying to build a house with nothing but enthusiasm and an IKEA manual.? ?

On the other hand, big firms aren’t immune to mistakes. I’ve seen consolidators waltz in, enforce rigid policies, and promptly alienate the very staff and clients they were trying to acquire. But when they take the time to understand the firm’s culture and align their goals? That’s when magic happens.? ?

The successful deals all share the same DNA:?

1. Cultural Compatibility: Both sides genuinely align on values and priorities.?

2. Professional Advice: Sellers work with sell-side advisers who know how to navigate the choppy waters of M&A and have been there themselves.?

3. Thoughtful Integration: Buyers have a plan that doesn’t just preserve the firm’s strengths but builds on them.? ?

Reject the Wrong Fit, Not the Wrong Buyer

Connor’s article raises an important point: cultural misalignment can wreck even the most financially lucrative deals. But rejecting consolidators outright feels a bit like swearing off airplanes because you didn’t like the peanuts on your last flight.??

Consolidators aren’t inherently the problem, it’s how some of them approach deals.? ?

In truth, excellent deals can (and do) happen at all levels—national, regional, and local. The common denominator is cultural alignment. Buyers who take the time to understand the seller’s business, respect their values, and work toward a shared vision are the ones who succeed, no matter their size.? ?

A Better Way Forward? ?

For owners of financial advice firms, the focus shouldn’t be on rejecting consolidators or forming an exclusive club.??

Instead, it should be about building a culture-first approach to deal-making.??

Whether you’re selling to a consolidator, a regional buyer, or the office down the road, the priority should be finding a buyer who values what you’ve built and has the vision to take it forward.? ?

Connor’s call for collaboration is spot-on, though, and one we support whole-heartedly??

Sharing best practices and fostering dialogue among IFA owners can only strengthen the sector. But let’s be clear: the goal isn’t to reject consolidators, but to reject cultural mismatches.? ? The best deals aren’t about size or labels. They’re about values, vision, and shared success. And isn’t that what every owner wants for their business??

Brian Hill MSc MCSI? ?