Happy Wednesday, siblings, and I hope you are feeling springlike. Even up here in the frozen North things are coming back to life; give it another week and the sap will be fully risen, as the poet never quite wrote.  There’s even blossom on the trees, which is a lovely sight until Nature remembers that it’s Scotland and blows it all off again overnight, at which point it’s just a big mess that needs cleared up. 

Speaking of Scotland, we’re very proud of the fact that we’re in the news so much at the moment, and not for the usual diet of deep-fried nonsense, heroin addiction and pumping the English at rugby. No, it turns out that our public discourse can be just as corrupt as anywhere else, thank you very much, and our politicians just as venal. What’s particularly delightful is not just that there have been shenanigans, but that they are so brilliantly low-rent. Not for our lot the sugar rush of skimming billions – the biggest stooshie is over a camper van parked on someone’s granny’s drive. A nice camper van, but still. As Tommy once said so memorably in Trainspotting, “doesn’t it make you proud to be Scottish?” 

It’s worth remembering, in a time when journalism is also in the news for the wrong reasons, that Winnebago-related misdeeds and many other things that exercise us still need journalists to go and dig them up; to do the work behind the scenes and form it into something we can chew and digest easily. So when we get something that’s genuinely useful and properly researched we should call it out. 

And that’s what we got from Citywire this week – a good look at the major PE-backed advice firms in terms of their deal flow, their financial health and more. Citywire counted 34 of these; I suspect there are more hanging around out there and of course private equity comes in lots of different forms; it’s not just big PE houses with squads of MBAs coming to take the rings off your fingers. 

You can – and should – read the piece for yourself, but for me there were a couple of things that stayed around in my addled brain. The first is that despite literally billions of pounds being piled into these larger advice businesses – presumably in the hope of creating an SJP-killer – none of them have really hit their stride yet, apart from True Potential. Everything just feels muddy and slow, as businesses which are, in the main, combinations of lots of very small firms with opinions of their own try to retool what they do into something that scales. Of course, what PE really wants is to exit with a good valuation – double in three, triple in five – but to do that these businesses are really going to have to kick on. 

It’s hard to see how they’re going to do that – Citywire finds that deal flow is slowing; something we’ve observed too as we talk to firms who are being targeted by the consolidators. And pure organic growth isn’t the easiest thing to achieve either, especially when the bonnet is up for fixing process, structure and all the rest. Margin grabs for investment or platform manufacturer status are a thing, and that’s all fine, but again everything comes with a price tag and it just pushes that hockey-stick profitability moment that is the real engine of zesty valuations further down the track. 

One thing we’ve observed which I think sits behind some of the numbers in the piece is that it’s by no means the case that once a firm has been acquired everyone in it assumes the position and does what they’re told like good little advisers. The owners may well be making out like good’uns, with enough sale proceeds to buy a whole fleet of camper vans, but we do see a slow but steady stream of people leaving and – irrespective of restrictive covenants – taking clients with them. I’m not sure this isn’t cyclical; after the consolidation comes the re-fragmentation. And if the whole house is built on keeping people where they don’t want to be, then that feels less than solid. The natural unit of advice firms may – even with all the tech and all the change – remain small.  

Anyway, it was a really good piece, so congrats to Zachariah, Jack, Alicja, and Selin. More of this sort of thing. 

#LINKERVAN 

• We’re still hiring – if you would like to be a cat then now’s your chance. Details here.  
• Moar lang cat news – State of the Platform Nation, the publication we’re best known for, is out now. You get it these days by being an Analyser subscriber, and you can find out how to be in that merry gang here.  
• Interesting results from Transact – not all straightforward but the market liked it with an 8.5% or so jump before settling back a little.  
• Yet moar lang cat news – your regulatory affairs Team of Glory have a new podcat out – hear Tom and Alison on the latest FCA stuff. Worth listening to if only to hear Tom forget what SMCR stands for. 
• And your music choice – well, it’s predictable but of course it had to be this. Any time one of the greatest thrash metal bands ever puts out a new album that shows even after decades in the game they can still bring the speed and the power needs celebrated here. And I’m happy to do it. So here’s Overkill with Scorched. (Oh, did you think I meant someone else? Then this is for you, and I hope you like your eleven minutes of turgid metal-by-numbers). 

I’m out and about next week, so another feline will Update you, but until then remember, if the camper van’s rocking, don’t come knocking. It’s probably…oh, never mind. 

Mark