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Newpark Group

Business Values - BOLR terms

We do not appear to have a functioning market in adviser businesses. I think it would be well worth developing one. Mike Moore's new business - - will definitely help. The reason why market-makers are needed is because at present we have such wide diversity in opinions about what adviser businesses are worth. We also have sharply divergent views about what they will be worth.

Some say they are overpriced. Some say under. I am aware of a number of transactions in the market - and the average of those would be about 3.3 times.

Connected to the issue of valuation is Buyer of Last Resort terms. (BOLR). A number of advisers have said to me that they think companies are backing away from these. Will they go? This is tied to the issue of future values, and in particular what the impact of regulation on adviser business values will be over the coming months. I am less hawkish on this issue than most.

While regulation may reduce the number of practicing advisers by 'a number' they will likely be the ones with less capital. The reduction in the ability to acquire bases will likely not fall - but it may be sated for a while with greater choice. Some believe that the value of bases will fall because of the costs of compliance. But for many purchasers those costs are fixed, and have been paid for their own business, and therefore will not apply to a further acquisition.


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