A UK advice practice is usually valued from its recurring income, with client retention, age profile, adviser dependence and deal terms affecting the price. Larger firms may be valued on profit. A useful estimate is a range based on your own figures, rather than a market average treated as an offer.
Most owners of advice firms have a number in their head. It usually came from a conversation at a conference, a rumour about what a nearby firm went for, or a multiple someone mentioned three years ago. Almost none of those numbers survive contact with an actual buyer, because they were never built the way a buyer builds one.
This article sets out how a buyer would price your firm in 2026, works a full example on a £20m book so you can see every step, and explains why the honest answer is always a range rather than a point. It is the foundation piece for this site's what your practice is worth pillar; the articles that follow it take each moving part in turn.
What a buyer is actually buying
Strip away the deal structure and the legal wrapper, and a buyer of a UK financial advice practice is buying one thing: your client bank and the income it produces. Not your office, not your brand, not your years of goodwill in the abstract. The asset is the set of ongoing client relationships, the assets those clients hold under your advice, and the recurring fees that flow from them.
The FCA is explicit that the client bank is the firm's asset, and its published expectations of firms selling client banks treat it exactly that way: as a thing of value that can be sold, and that carries obligations with it when it is. That regulatory framing matches the commercial one. A buyer models the future income from your clients, discounts it for the risk that some of it walks away, and prices from there.
Everything else about your firm matters only insofar as it affects that income stream. Your team matters because clients stay with people. Your systems and data matter because they determine how cleanly the income transfers. Your compliance record matters because past advice carries forward as liability. But the engine of the valuation is the recurring income itself.
Why recurring income is the base
Advice firm income splits into two kinds: initial fees, which depend on you winning new work every year, and recurring fees, typically the ongoing advice charge on funds under management. Buyers pay meaningfully for the second and very little for the first, because recurring income arrives whether or not anyone sells anything next year. It is contractual, predictable and, crucially, transferable.
That is why the standard shorthand for valuing smaller and mid-sized advice firms is a multiple of recurring income. Larger firms, particularly those with significant staff costs and profit that can be measured cleanly, are often priced on a multiple of EBITDA instead; the boundary between the two methods, and which a buyer will apply to your firm, is covered in EBITDA versus recurring income. For a typical owner-managed practice, though, recurring income is where the conversation starts.
On the current level of those multiples, the most widely cited market data comes from Gunner & Co, whose analysis of completed deals put the average recurring-income multiple at 4.2x in H1 2025, up from a stable level of around 3.5x across 2023 and 2024 and the highest point since 2018. The drivers they identify are competition among buyers for well-prepared firms and greater pricing confidence following the bedding-in of the Consumer Duty.
An average of 4.2x does not mean your firm is worth 4.2x. Averages are made of deals above and below the line, and the deals above the line share characteristics that most firms do not have. A realistic planning range for a sound but unexceptional firm in 2026 runs from roughly 2.8x recurring income at the cautious end to 4.2x at the strong end. That range is what the worked example below uses.
The worked example: a £20m firm
Take a directly authorised firm with £20m of funds under management, all of it in ongoing advice arrangements at a 0.6% annual charge. The working runs in three steps.
Step one: establish the recurring income. £20m of FUM at a 0.6% ongoing charge produces £120,000 a year of recurring income. That is the number a buyer starts from, and it is worth pausing on how exposed it is. If your ongoing charge averages 0.5% rather than 0.6%, the same £20m book produces £100,000 and every subsequent number shrinks with it. If a slice of your FUM is not on an ongoing charge at all, it drops out of this calculation almost entirely.
Step two: apply the multiple range. At 2.8x, £120,000 of recurring income prices at £336,000. At 4.2x, it prices at £504,000. Rounding down to the nearest £10,000, which is the honest way to present numbers this approximate, gives a range of £330,000 to £500,000.
Step three: read the range properly. The £170,000 gap between those figures is not noise. It is the market's price for the differences between a firm a buyer wants and a firm a buyer will tolerate. Where you land within it is substantially within your control, and mostly determined years before you sell.
Two cautions on the example. First, headline price is not cash on completion: most deals pay a portion up front with the balance as deferred consideration, often contingent on client retention through an earn-out. The structure of those payments, and how to protect them, is its own subject, covered in deferred consideration and how to protect it. Second, the multiple applies to income the buyer believes will persist; income they doubt gets discounted or excluded before the multiple is ever applied.
Why a range and not a number
It is worth being direct about why no honest valuation of an advice firm arrives as a single figure.
A multiple is a compressed prediction. When a buyer pays 3.5x recurring income, they are predicting that the income persists long enough, at low enough cost, to return the purchase price and a profit. Every uncertainty in that prediction, client attrition, adviser departure, regulatory change, integration friction, widens the honest answer into a band. A single-figure valuation is not more precise than a range; it is a range with the uncertainty hidden.
The range also reflects that price is set in a negotiation, not read off a table. The same firm can transact at different multiples depending on how many buyers compete for it, how well its data withstands due diligence, and how the deal is structured. A higher headline multiple paid mostly through a long contingent earn-out can be worth less in real terms than a lower multiple paid substantially up front. Comparing your firm to a rumoured local deal on headline multiple alone is comparing two numbers that measure different things.
What moves a firm within the range
If 2.8x to 4.2x is the field, the interesting question is what determines your position on it. The full treatments are in the things that raise your multiple and its companion piece on what reduces it, but the main forces are worth naming here.
- Client demographics. A book of clients averaging 58 years old, still accumulating, is worth more per pound of income than a book averaging 74 and drawing down. Decumulation shrinks FUM every year, and mortality does the rest. Buyers model this coldly even when sellers do not.
- Income concentration. Recurring income spread across two hundred households is safer than the same income where ten families account for half of it. Concentration is a discount, and buyers find it in the first hour of due diligence.
- The owner's role. If every material client relationship runs through you personally, the buyer is purchasing an asset that degrades the day you leave. Firms where other advisers hold relationships, or where clients relate to the firm rather than the founder, transfer better and price higher.
- Data quality. A back office where every client's ongoing service, charge basis and consent history can be evidenced quickly makes diligence short and confidence high. Gaps and reconstructions do the opposite, and the price follows the confidence.
- Regulatory posture. Whether you are directly authorised or an appointed representative shapes how the transaction works, and a clean complaints and past-advice record affects both price and the warranties you will be asked to give. Liability for advice already given does not vanish at completion, which is why run-off cover exists and why buyers ask about it early.
None of these is fixed. Client demographics move slowly, but data quality, income concentration among new clients, and dependence on the owner are all things a two- or three-year preparation window genuinely changes. The gap between the bottom and top of the range on the £20m example above, £170,000, is a reasonable estimate of what that preparation is worth on a firm of that size.
Structure changes the answer too
One further reason your firm does not have a single value: the same client bank can be sold more than one way, and the routes price differently.
A share sale transfers the whole company, liabilities included, and is typically what the 2.8x to 4.2x recurring-income framing describes. An asset sale transfers the client bank out of the company, leaving the corporate shell and much of its history with you; it changes the tax treatment, the client consent process and the risk the buyer takes on. There is also a distinct route in which the client bank moves through a structured asset sale to a national acquirer, with the seller's income continuing for a period, commonly running many months, rather than being capitalised entirely on day one. Each route suits a different kind of firm and a different kind of exit, and the trade-offs are set out in asset sale or share sale: the choice that changes everything.
The point for valuation purposes is that "what is my firm worth" quietly contains a second question: worth under which structure, paid on what timetable, with which risks retained. Two offers with the same headline number can leave very different amounts in your hands, which is why the headline multiple should be the beginning of your analysis and never the end of it.
Where that leaves a £20m firm in 2026
Pulling the threads together: a £20m practice with £120,000 of genuinely recurring, evidenced, transferable income should think of its 2026 value as sitting between £330,000 and £500,000 on a conventional sale, with its position in that band determined by client age, income spread, owner dependence, data quality and compliance history, and with the real-terms outcome further shaped by deal structure and payment timing. The market backdrop is favourable, with the Gunner & Co H1 2025 average at 4.2x and buyer competition strong for well-prepared firms, but favourable markets reward preparation rather than replacing it.
The arithmetic itself, you will have noticed, is not difficult. Recurring income times a multiple is a calculation any owner can do on the back of an envelope, and doing it for your own numbers is a more useful exercise than reading anyone else's example. If you want a figure of your own to react to, the free IFA valuation calculator takes your FUM and charge basis and gives you a range with the factors affecting it explained.