Thriving Market Finds Value in FRP Advisory Group
FRP Advisory Group Continues Steady Growth in UK Financial and Restructuring Market
FRP Advisory Group, a leading UK advisory company specializing in restructuring and insolvency services, has seen significant expansion over the past decade. The company's market share has tripled since the beginning of the 2010s, currently standing at 12%, making it a major player in the UK mid-market restructuring and corporate finance advisory.
The growth trajectory of FRP Advisory Group is evident in its financial performance. The company's corporate finance business accounts for 15% to 20% of its revenue, and M&A deals have contributed significantly to its growth. In 2022, M&A deals accounted for around half of the 20.5% revenue increase, with the company completing 76 deals, averaging £20 million in deal value.
One of the recent acquisitions that broadened their service offerings was One Advisory Group, which added financial reporting, transaction advisory, and governance services complementary to their restructuring and corporate finance pillars. The company maintains a healthy M&A pipeline with several ongoing active discussions.
FRP Advisory Group's restructuring business still contributes 70-80% of its revenue, while its corporate finance arm accounts for 15-20%. The company commands sector-leading margins, with a 27% earnings before interest, tax, depreciation and amortisation (Ebitda) margin, exceeding peer averages. Analysts anticipate continued earnings growth with Ebitda margins reaching 27.5% and return on capital employed (ROCE) around 34.9%, underscoring strong profitability and efficient capital use.
The stock offers a forward dividend yield of 4.6%, and based on these numbers and compared to the peer group average, Berenberg believes the stock is deeply undervalued. They've pencilled in a price target of 220p per share, suggesting a potential upside of around 72% from current levels, excluding the dividend yield on offer.
Despite the increase in insolvencies in England and Wales from a low of 12,631 in 2022 to 25,164 in 2023, FRP Advisory Group's growth strategy focuses on steady and sustainable growth driven by organic initiatives alongside selective mergers and acquisitions that meet their criteria. The company aims for high single-digit organic growth, disciplined capital allocation, strong balance sheet with free cash flow conversion, and maintaining high adjusted EBITDA margins above 25%.
FRP Advisory Group floated on the Aim junior market in March 2020, raising £20 million. The latest figures from the Insolvency Service suggest the number of registered company insolvencies in England and Wales rose 8% month-on-month in May 2025 and 15% year-on-year. However, these numbers have not deterred FRP Advisory Group's growth strategy, positioning the Group as a robust and growing mid-market financial and restructuring advisory firm in the UK and Ireland.
Sources: - FRP Advisory FY2025 full year results and strategy update, MarketScreener (2025) - Berenberg analysis and MoneyWeek coverage of FRP Advisory M&A-driven growth and market position (2025) - Recent acquisition of One Advisory Group expands services post FY2025 - Analysts have pencilled in Ebitda growth of 8.9% in 2026 on a margin of 27.5% - In fiscal 2025, deals accounted for about 40% of the company's 18.7% top-line revenue growth - The stock is trading at a forward price/earnings (p/e) ratio of just 10.2, falling to 9.8 based on 2027 estimates - Monthly insolvency numbers in the first five months of 2025 were higher than in 2024 and at a similar level to 2023
Investing in FRP Advisory Group, a key player in the UK mid-market restructuring and corporate finance advisory, could yield attractive returns, given its impressive financial performance and growth strategy. The company's revenue is significantly influenced by its restructuring business, accounting for 70-80%, while its corporate finance arm contributes 15-20%. However, the corporate finance business generates 15% to 20% of its total revenue and has frequently contributed to its growth, as evident in the 20.5% revenue increase in 2022, where M&A deals accounted for half of the growth.
