Dyer Baade’s research identifies a peak in ownership Years 2 and 3. The finding offers a useful perspective on buyer behaviour, provided it is not mistaken for a timetable.
By Dr Daniel Baade | Chief Executive Officer, Dyer Baade & Company | 6 min read
A consolidator’s acquisition history is easy to mistake for its current appetite. A group that announced a series of deals last year may still appear on every seller’s buyer list, even as its management turns to integration. Another, less visible group may have fresh capital and a pressing reason to establish itself in a particular region. The names remain familiar while the decisions behind them change.
Private equity ownership provides one way to examine that change. Dyer Baade’s analysis of UK wealth management platforms measures acquisition activity across individual sponsor ownership periods. It follows the investment cycle of the sponsor, rather than treating a company’s entire history under private equity as a single uninterrupted period. That distinction matters where a platform has passed from one investor to another.
The pattern is clear in the sample. Average acquisitions rise from 1.98 in ownership Year 1 to 2.50 in Year 2 and 2.68 in Year 3, before moderating to 2.18 in Year 4 and 1.72 in Year 5. The full curve and its sample counts appear in our research into UK wealth management consolidation. The finding concerns the timing of recorded acquisitions. It does not establish that every platform follows the same sequence, or that bidders offer their highest prices during the busiest years.
That qualification is more than methodological housekeeping. Later ownership years contain fewer observations and a different selection of businesses: platforms that have already changed hands are no longer continuing through the same sponsor period. Announcement and completion dates can also place transactions in different annual categories. The Years 2–3 peak is best understood as an observed concentration of activity within the research’s ownership-year categories, rather than a precise anniversary-based window for approaching any particular buyer.
There are plausible commercial explanations for the pattern. New backing can provide acquisition funding without immediately providing all the people and processes required to use it. A platform may need to recruit a corporate development team, agree its target criteria, establish financing arrangements and test how acquired businesses will be integrated. Relationships with potential sellers also take time. An owner willing to talk is not necessarily ready to transact when the investor’s capital first arrives.
As those arrangements develop, more opportunities may reach completion together. Management has a clearer view of which businesses fit, advisers understand the mandate, and earlier conversations begin to produce actionable transactions. The sponsor may also have enough time within its intended investment horizon for acquisitions to contribute to a later ownership event. These are reasonable interpretations of the curve, but the dataset does not isolate their individual effects.
The later moderation is equally open to interpretation. A platform may be concentrating on integrating what it has acquired, demonstrating organic growth or preparing a refinancing. It may have completed a particularly substantial acquisition that absorbs more capacity than several smaller deals. Lower deal count can therefore coexist with a significant commitment of capital and management attention. The number of acquisitions is not a measure of their size, strategic importance or eventual success.
For a private equity firm entering the sector, the research raises a practical question well before signing a platform investment. How quickly can the acquisition strategy become operational? A forecast that assumes immediate, sustained purchasing needs more support than a list of potential targets. The investor needs to know who owns those relationships, how far discussions have progressed and who will carry responsibility for execution once the platform’s management is occupied with running the business.
It also needs an integration plan that keeps pace with the acquisition plan. Buying three businesses in a year can mean three overlapping demands on compliance, client communications, finance and technology. The relevant limit may be the availability of experienced managers rather than capital. A programme built around a fixed annual acquisition target can put pressure on selection standards just when the organisation needs to be most disciplined. Pacing should follow the quality of opportunities and the capacity to absorb them.
Established acquirers can use ownership-cycle research to sharpen their view of competition. Where several relevant platforms are actively deploying capital, a good regional business may attract more attention. Where those competitors are occupied with integration, another buyer may have room to build relationships earlier or pursue an opportunity others cannot accommodate. This is a hypothesis to investigate through current market intelligence. Acquisition counts alone cannot reveal who is preparing a bid, how much they can pay or whether their investment committee will approve it.
The same distinction matters to shareholders preparing a sale. Sponsor age can help frame the questions, but it should not become a crude screening rule. A recently backed group may still lack the resources to complete a demanding transaction. A platform approaching a potential exit may remain highly interested in an acquisition that strengthens its proposition. Excluding either on the basis of a calendar would risk missing a credible counterparty.
For a sizeable business, buyer assessment should therefore combine ownership context with a current strategic rationale. What would the acquisition enable the group to do? Does it have committed funding, a decision-maker willing to sponsor the proposal and management capacity to execute? What else is competing for those resources? In wealth management M&A advisory, the value of understanding a buyer’s cycle lies in improving those judgements and the sequence of engagement, rather than claiming to predict an offer from the investment date.
Owners who are still some distance from a transaction have a different opportunity. They can develop an understanding of relevant counterparties while keeping their own priorities in view. A buyer’s particularly active year is not a sufficient reason to bring a business to market before management succession or financial reporting is ready. Equally, waiting until everything is perfect may overlook a period when several suitable buyers have strong reasons to engage. Timing is a comparison of business readiness and market opportunity, not an attempt to identify a universally optimal month.
For sellers retaining equity, the buyer’s acquisition plans also become part of the investment they are making. A rapid programme can create opportunity, but it introduces integration demands and further calls on capital. The seller should understand how management intends to measure success after completion and what happens if the programme runs more slowly than expected. Historical activity provides context; the quality of the current plan matters more to the future value of the shares.
The research gives substance to something that deal counts alone obscure: acquisition appetite changes within an ownership period. For investors, that makes early operating preparation consequential. For owners, it makes a current understanding of the buyer more valuable than its reputation for activity. The useful conversation begins with where the platform is today, what it is trying to build and whether the proposed transaction advances that plan.
About the author
Dr Daniel Baade is Chief Executive Officer and Co-Founder of Dyer Baade & Company. He advises founders, boards and private equity investors on sales, investments and acquisitions across Wealth & Asset Management. His work combines transaction execution with proprietary research into valuations, buyer behaviour and ownership. He works with clients from early consideration of their strategic options through preparation, negotiation and completion.
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For sponsors planning an acquisition programme, or owners assessing potential buyers, the interaction between funding, ownership timing and operating capacity deserves a closer look. Discuss your acquisition or ownership strategy