Buyers want to be confident that your firm operates with sound compliance practices and that the risk of future regulatory issues is low. Your firm’s approach to regulation reflects not only your operational discipline but also your values, culture and how you treat clients.
Understanding the regulatory lens of the buyer
Any acquirer will want to understand how your firm aligns with the Financial Conduct Authority’s expectations, particularly Consumer Duty.
This includes how you approach the four key outcomes: products and services, price and value, consumer understanding, and consumer support. These principles now underpin much of how regulatory standards are assessed and monitored, and they form a common lens through which acquirers will view your business.
Fee and service proposition
Your fee structure and service offering will be one of the first areas reviewed. Acquirers will want to see a clear, consistent charging model that represents fair value. This means being able to show how fees relate to the service delivered, how client consent is obtained and reviewed, and whether there is evidence that clients understand what they’re paying for.
A misaligned or inconsistent fee model can raise concerns and may require sorting before a deal progresses.
Evidence of advice suitability and reviews
Advice files and client records will also come under scrutiny. A strong track record of suitability reports, robust fact-finding, and documented client objectives are essential.
Regular client reviews that are properly recorded and demonstrate ongoing suitability will be a positive indicator to a buyer. Weaknesses in this area can delay or derail a deal, given the regulatory focus on demonstrating reviews have been conducted.
Identification of vulnerable clients
Firms must also be able to show how they identify, record, and support vulnerable clients.
This is not only a regulatory requirement but also an ethical consideration. A prudent acquirer will expect to see that appropriate systems and processes are in place, and that staff are trained to recognise and respond to signs of vulnerability.
This can demonstrate a mature and responsible culture, which can add value in the eyes of a buyer.
The link between regulatory health and deal structure
For asset transactions, a clean compliance record is critical. Even though liabilities may not automatically transfer, buyers will review your files closely to ensure there are no hidden risks attached to the client base. Demonstrating strong regulatory discipline will support both confidence and valuation in an asset deal.
Firms with high regulatory standards, clear documentation, and a culture of good governance are more likely to command a higher price, experience a smoother transaction process, and face less scrutiny. Meanwhile, gaps or weaknesses may result in reduced valuations and extended due diligence periods due to the perceived risks.
Strengthen your position before you go to market.
Investing time in reviewing and strengthening your regulatory position before entering sale discussions is invaluable. Consider conducting a mock audit or engaging a compliance consultant to review your files and processes. The aim is not just to meet the minimum standards, but to show that your business is well run, client-focused and built on solid foundations.