M&A Risk in the UK Wealth Management Market

Key considerations for CEOs wishing to avoid deal value degradation (DVD)

The first in our new series of pieces on mergers and acquisitions explores the UK wealth management market and examine some key complexities for any CEO considering an acquisition. As experts in asset and wealth management, we argue that the alignment of client segment to operating model capabilities is never considered enough during the deal process, resulting in potential lost revenues or expensive projects further down the line.

The differences between the operating model that serves the longer-term investment in the younger segment is significantly different to that for the near-to and post- retirement segment. To avoid deal value degradation (DVD), CEOs need to consider the implications for each of your future client segments and how these will be successfully served by your post-deal operating model.

We recommend conducting a visioning and target state analysis exercise to draw out weaknesses (and strengths) in the proposed operating model and client segment capability of the future organisation.

These are three questions we recommend you always ask yourself when considering a deal:

  1. What is the target’s client base and how are they served by your operating model?
  2. Will the acquisition extend your capabilities into new market segments or make existing capabilities more efficient?
  3. What is the cost of integration of the target’s clients and capabilities into your operating model?

The growing youth market

As an indication of how the future wealth market will look, the number of defined contribution (DC) pension savers rose by 60% from 2015 to 10 M in 2020, the working cohorts currently occupied by Millennials and Gen Z being among the biggest changes (65% and 107%, respectively). Furthermore …

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I use my strategic and technical knowledge of operating model design, client journeys, and process optimisation to support clients.