Evelyn Partners private equity sale: Is this the first domino to fall?
Evelyn Partners, the wealth management and accountancy firm that manages over £60bn in assets, is now up for sale, and analysts are warning the move could start a “rush” of financial services acquisitions.
The planned £1.5bn sale by major owner and private equity house Permira comes after it bought in by purchasing Bestinvest in 2014, which was then merged into Tilney, and eventually merged into Smith and Williamson in 2020 to create Evelyn Partners as we know it today.
Eventual outcomes of the sale could even take the form of a break-up, with Evelyn’s accountancy business separated out from the firm, The Sunday Times first reported.
This could be especially concerning for investors in Evelyn Partners, said Juliet Schooling Latter, research director at Chelsea Financial Services, due to uncertainty over the potential breakup.
“A swift and successful sale process would be ideal to minimise investor anxieties,” she added. “Any continued uncertainty would likely result in investors leaving as stability and confidence are paramount in financial services.”
Private equity houses often operate on ten-year time horizons, and given that the company first invested in Evelyn Partners in 2014, it makes sense for them to start looking for a way out.
“At some point, those private equity backers will want to cash in,” explained Ben Yearsley, director of Fairview Investing.
This mandate to return capital even if it risks damaging the long-term continuity of the company “underscores a broader challenge associated with private equity ownership”, said Schooling Latter.
So, what next?
Sticking to strict time horizons can end up disrupting the business, causing setbacks, and maybe even undoing a prolonged and expensive re-branding effort.
So, Yearsley said that the real question around Evelyn Partners will be: “Who is the buyer?”
Well, while private equity is eager to sell, they may also be eager to buy.
Private capital firms are currently sitting on around $4.5 trillion (£3.5 trillion) in ‘dry powder’ or unspent money, and that figure is only growing.
Pressure is starting to pile on private equity houses to spend some of that money, as almost a third of their entire assets under management sits gathering dust, and they struggle to justify their massive fees.
This is especially true as the UK financials market has sagged to record lows, as seen in the ongoing attempt for private equity giants to buy up Hargreaves Lansdown.
Equally, another wealth manager may seize the opportunity to snap up Evelyn Partners. The market has been waiting in anticipation for another major merger following the combination of Rathbones and Investec W&I early last year.
Rumours have circulated for months that competitor Brooks Macdonald would be next to be snapped up by a larger competitor, while Liontrust tried and failed to take over Swiss rival GAM last summer.
Yearsley also suggested that an Evelyn Partners sale would create a “rush for the exit” for others in the wealth management space, as no private equity owner will want to be the last to sell their stakes.
Other private equity backed wealth managers include 7IM, Wren Sterling, and Independent Wealth Planners, the latter of which saw rumours it could be snapped up by rival Titan Wealth earlier this year.
Evelyn Partners declined to comment.