Software data reveals uptick in SMSF firm acquisitions
Data on growth patterns among SMSF admin firms held by one of the major SMSF software companies indicates an upwards trend towards acquisitions among the larger admin firms.
Class chief executive Kevin Bungard said data held by Class showing the number of SMSFs held by different sized firms indicates that some of the larger SMSF firms have been more active in acquiring other businesses.
While the growth rate over the past five years for smaller SMSF firms administering between 25 to 100 SMSFs was very strong at around 20 per cent, increasing the size of the firm was not a primary focus for these businesses, said Mr Bungard.
“At the smaller end, there aren’t a lot of firms that aren’t necessarily looking for growth, but the interesting thing is that at the upper end of the scale, we see very uneven, lumpy growth and part of the reason for that is that a lot of the larger firms are trying to grow via acquisition,” he said.
“What we see when that happens is they’ll make the acquisition and there’ll be a period where they basically have indigestion, where it takes a while to actually get through that acquisition and get back to growing the business again in a streamlined way.”
The acquisition of another business can be a very slow sales cycle according to Mr Bungard, particularly if it’s a larger firm that’s being acquired, and it’s also quite costly.
“It also means that from an organisation point of view when you suddenly bring on thousands of funds you really have to try and reinvent your business,” he said.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.