How Data Can Spot Private Wealth

Wealth creation in the UK is going through a challenging period, with our research revealing a downturn in wealth creation and liquidity events driven by private exits.

We’ve also seen a 17% decrease in the value of fundraisings in 2024 compared to 2023’s figures (a reliable leading indicator of wealth creating events).

Meanwhile, UBS’ Global Wealth Report 2024 has predicted the UK could see a 17% drop in volume of USD millionaires between 2023 and 2028 — the largest drop seen in the report. Meanwhile, Germany is projected to see an increase in the number of USD millionaires by 14% and France by 16%.

The impact of this on wealth management firms is clear. There are fewer new HNWIs (high net worth individuals) in the UK and this is causing a knock-on effect that’s leading to fierce competition between wealth management firms.

It’s therefore more important than before for wealth management firms to leverage data to inform their business development strategy.

In this article, we’ll explain how you can use data to gain a competitive advantage — especially when it comes to finding new clients and building trusted, long-lasting relationships with them.

We’ll also reveal the key data points you need to include in a data-led business development strategy, which will help identify:

• Emerging liquidity events before they happen
• "Quietly wealthy" individuals, building wealth from profit-making businesses
• New avenues to engage these hard-to-find individuals — where credibility and trust is key from the outset

Finding soon-to-be wealthy business owners

Explore previous funding rounds

Finding companies that secured funding five or more years ago, but with investors still on the cap table, is a reliable sign that an investor could seek to exit.

This relies on the assumption of a five-to-seven year exit horizon for most investors. If you know the investor well, and can approximate their exit horizon more specifically, you can increase the accuracy of this type of search.

Another way of identifying this is by calculating the change in valuations between the funding round an investor came in on compared to the company’s most recently secured round.

Time & valuation growth are reliable indicators of a company nearing exit. Investors on the cap table looking to secure returns for Limited Partners can add urgency to this.

It’s also worth keeping an eye on hidden investment rounds (often indicated by SH01 filings) to get the inside track. These rounds may indicate increased or reduced relevancy to your service, trigger a new engagement with that individual, or expand the level of support you can provide them.

Founders and succession planning

Seeking owners approaching the UK retirement age is also a great way to identify a potential transfer of wealth. Succession planning generally happens in a founder’s late 50s, as they begin to consider how to secure their business’s legacy.

And this report from HSBC indicates not only that entrepreneurs plan to continue growing their net-worth via private company building later in life, but the majority (66%) are still not planning their exit.

Looking for age diversity on the board, by incorporating director age as a data point in your research, is also a useful way to spot succession planning, as this can reveal founders lining up younger family members.

This offers some indicators on who to approach, and when, in advance of the founder’s retirement, granting wealth managers the time necessary to nurture trusted relationships.

Historic MBO/MBI activity

You can also keep an eye on businesses with a management buy-out or buy-in activity in the last five to ten years. Similar to the value in tracking historic equity investment activity, this is because any party involved in an MBO or MBI will likely have an exit strategy in mind.

Following an MBO/MBI, which by definition involves significant internal restructuring, the company will be on a growth-first footing, allowing the investor to make larger returns further down the line.

When combined with strong performance and growth metrics following the MBO/MBI, it’s highly likely that a liquidity event will be on the cards for the management team in question.

C-Suite appointments

Another data point that could suggest an imminent exit is the appointment of new C-Suite individuals. A CFO joining a company, for example, can be a sign that the company is gearing up for a liquidity event, whether an IPO or acquisition.

If the individual joining the business has a history of helping businesses exit, this further increases the likelihood of an upcoming exit and, therefore, a transfer of wealth.

These are just a handful of signals that a liquidity event could soon occur. And combining these signals can increase the likelihood of an exit.

Next, we’ll turn our attention to the silent builders of wealth — and how you can spot them more easily.

How to find (silently) wealthy individuals

In addition to the wealth inheritors of tomorrow, there are plenty of wealthy individuals building, advising, and investing in highly successful private companies that could be in need of your wealth management services.

Finding them is the challenge, especially when the kinds of businesses owned by these founders may not necessarily appear in the press or through trackable liquidity events. Here are some ways you can find these silent wealth builders.

Individuals with lots of shareholdings

Serial angel investors into private companies are well worth engaging with. After all, they’re likely to have a greater number of shareholdings and therefore in receipt of a handsome set of dividends.

They may also sell these shares on the secondary market, adding to their wealth. Combine this information with valuation data — which can be roughly estimated via SH01 filings from Companies House — and you’ll be able to calculate the net worth of these individuals. This can then inform whether they’re a good fit for your firm’s minimum wealth requirements.

When combining these individuals with those holding shares in companies approaching an exit, you can then identify established HNWIs, who may move into the UHNW (ultra high net worth) category.

Long-term founders in traditional industries

Search for long-term founders of companies that have healthy profit margins and more sustainable growth, without needing to raise money quickly with an exit in mind.

Signs of successful businesses based on this model include consistent headcount growth and turnover. And whilst high-growth companies dominate the headlines, traditional verticals — such as manufacturing — are quietly accumulating substantial wealth. With less PR, and therefore fewer headlines, wealthy founders in companies are less immediately visible.

Strong EBITDA margins

EBITDA (earnings before interest, taxes, depreciation, and amortisation) is a common metric used among dealmakers to identify healthy, robust businesses. This is because it shows how much money a company generates before considering non-operational expenses such as interest and tax.

EBITDA is also a strong profit and losses line to research when identifying businesses more likely to exit. After all, a higher EBITDA margin is demonstrable of growth and therefore a business’s value in the eyes of investors.

Small board of directors

In short, a leaner board of directors means that a successful business, using some of the data points we’ve already discussed, results in larger amounts of cash divided between the directors. This can also be confirmed when reviewing director emoluments.

As a wealth manager, this is a great sign of a high net worth individual in need of your services — especially when used in combination with other data points.

High salaries, low headcount

An additional data point to consider is companies with a high wages and salaries line on their profit and loss statement, but with a low overall headcount. This often indicates highly paid and skilled workers, often in high-value services such as consultancy.

How to find and engage with both types of wealth holders

Wealth management is driven by connections, and a lot of work goes into not just maintaining existing relationships but also finding new ones.

Our platform offers a rich depth of people data, enabling subscribers to explore their network in an easy-to-understand infographic. From here, you can click into other peoples’ networks to find people in common and research their existing relationships.

This enables you to spot hidden overlaps of commercial interest between people.

Access to this type of data (especially shareholder data) is usually unstructured, sitting within confirmation statement filings on Companies House and certainly won’t be available to find on LinkedIn.

Find wealth management clients with Beauhurst

The post-liquidity race for clients is no longer viable. Simply tracking exits and then contacting individuals after the transaction means you’ll likely be too late.

And let’s be honest — cold outreach towards the HNW audience, particularly on a subject as sensitive as their money, is difficult at the best of times.

Doing it without the credibility of knowing as much about who they are and how they create their wealth, without a referral, or among a crop of other wealth managers soon after a liquidity event, will reduce your chances of success significantly.

You therefore need to build relationships earlier and find the optimal time to approach potential clients.

Whether you’re identifying founders preparing for a liquidity event, directors of quietly profitable businesses, or stakeholders in scaling companies with strong financials, Beauhurst gives you real-time insight into the individuals and businesses driving private wealth in the UK.

Take a virtual tour to see the platform in action, or fill in the form below to book a demo with our team today.