Ascot Lloyd is ready to pounce as the adviser market continues to consolidate to the tune of hundreds of firms a year, says Nigel Stockton.
Speaking to FTAdviser In Focus, the Ascot Lloyd chief executive said the private equity-backed business benefitted from unlimited buying power, and he did not see "any reason" why its growth plans should slow down soon.
He anticipated Ascot Lloyd would do "somewhere between seven and 10 acquisitions this year and then annually thereafter", doubling its pre-tax earnings "in the next three to four years".
And while it has thus far been focusing on IFAs only, Stockton hinted the company was ready to take on a restricted business, which it would run separately from the IFA.
He said: "First of all, Ascot Lloyd is an IFA and we're totally committed to that. We're not going to change horses anytime soon, and we've made that quite clear in the past.
"Would we buy a restricted business? Absolutely. It would need to be of a good size with an excellent brand. But you know, we will look at that in the coming coming months and years. So it's not ruling anything out."
In the event of such a deal, he said: "We'd run it as a restricted business and a third pillar in our group structure.
"So we'd have a restricted column and the DFM and our independent and then that will have to run under a separate brand because Ascot Lloyd is committed to being an IFA forever."
Ascot Lloyd did 12 acquisitions in 2020 but slowed down to a handful last year, saying there were "a few things going" in the business.
The advice firm is not currently profitable, having made a loss after tax of £30.5m in 2020 as acquisition and financing costs came to bite.
But Stockton put this down to "the way the goodwill is treated".
"The net profit before tax and the tax positions of firms in the space is always a bit opaque. So it's much better to look at the cash generative nature of the business. We're throwing off the thick end of £25nm of cash at the moment," he said.
"The fact of the matter is as the business grows and grows to the position it's going to be. It will be profitable by its very nature - it can't not be - so it's just a matter of waiting for that time."
The IFA was sold to Swedish private equity investor Nordic Capital by its owner, Oaktree Capital Management, earlier this year.
Stockton said its new backer is better capitalised, giving the consolidator more fire power to do deals faster.
"Nordic is a very well funded, very well capitalised, excellent private equity house, slightly larger than Oaktree in Europe," he said, adding: "We're in a position where we are capable of moving forward with acquisitions for however long we want."
