Atomic Consultancy, category winners at the 2023 ESTAS awards, concludes a record-breaking year and predicts an even busier landscape for agency acquisitions in 2024.
Founded just two years ago, Atomic has already facilitated 68 deals totalling over £20 million. This highlights the surging demand for agency acquisitions, driven by a number of factors:
- Shifting owner motivations – while retirement was the primary driver in past years, 2023 saw a rise in owners selling due to:
- Recruitment challenges which were pulling them back into hands on operations.
- Cost increases which were impacting profitability.
- Escalating legislative requirements, particularly in Wales.
- Pre-empting potential tax changes in the imminent general election.
- Refocusing their business on sales operations and capitalising on high lettings values.
- Growing appetite for acquisitions: Over 7,000 buyers are registered with Atomic, drawn by the advantages of acquiring established revenue streams and economies of scale compared to slow organic growth.
- Evolving buyer landscape: access to affordable funding became a significant hurdle in 2023. Increased interest rates and stricter lending criteria favoured “cash-rich” competitors, including:
- Professional investment funds: Recognising the excellent returns on investment offered by lettings portfolios these funds are entering the market in force.
- International buyers: Recognising the UK’s robust private rented sector as an attractive opportunity, large European and international players are fuelling competition, especially in London.
Laura Cooper, Acquisitions Director at Atomic, expects the current strong market performance to continue in 2024. She said:
“We’re seeing the same factors which influenced activity in 2023 continue, along with some additional aspects which are driving activity even further.”
Laura highlights three areas in particular:
- Large portfolio exits: Owners of businesses with 4+ offices and £3m+ lettings turnover may look to capitalise on valuations in some key areas, worried they may miss the peak of the market if they delay their decision.
- Election anxiety: As the potential for increased taxes looms, some owners may choose to sell before changes take effect, further driving deals in the short term.
- Rise of self-employed agents: The trend towards self-employed “estate agents” building their own lettings portfolios is creating new acquisition targets at an accelerated pace.
