Cavendish has brought in advisers from leading corporate consultancy Teneo to help it guard against low-ball takeover bids as consolidation sweeps through Britain's financial services sector.

Senior leadership at the boutique investment bank enlisted Teneo specialists last year, City AM can reveal, to conduct a valuation exercise aimed at supporting potential bid defence during what the firm described as "a period of uncertainty."

The work was undertaken to reinforce confidence in Cavendish's standing and facilitate "informed decision-making" in anticipation of any takeover approaches the City broker might attract, according to the company's annual report. Such exercises are commonly used by listed companies to establish an independent fair-value benchmark, giving boards a defensible basis for rejecting offers they consider below intrinsic worth.

The appointment of Teneo follows Cavendish's rejection last year of a bid from S&W for its mergers and acquisitions advisory arm. Cavendish itself was created through the 2023 merger of Cenkos Securities and Finncap.

Cavendish chair Lisa Gordon said: "It is good practice for the board of any listed company to undertake an independent valuation exercise to ensure it is prepared for any eventuality."

London's mid-market investment banking sector has undergone significant consolidation in recent years, driven by a decline in initial public offerings and broader capital markets activity. Rival firms Panmure Gordon and Liberum merged in 2024, while Numis was acquired by Deutsche Bank in 2023. The steady attrition of independent brokers has reduced the pool of domestic advisors serving UK mid-cap companies, a segment historically reliant on local firms for equity raising and corporate finance expertise.

The capital's wider financial services industry has similarly been caught up in a pattern of foreign buyers acquiring British competitors at valuations that appear attractive by international standards.

Earlier this year, Schroders and FTSE 100 insurer Beazley were both purchased by overseas rivals in quick succession. Fund managers W1M and Redwheel are also reportedly exploring sales, while Evelyn Partners changed hands for £2.7bn in February, acquired by Natwest after its private equity owners put it up for sale.

A person familiar with the matter told City AM that Cavendish has now completed the valuation exercise and is understood to no longer retain Teneo's services.

Cavendish doubles down on diversification

In the same report, Cavendish confirmed plans to diversify beyond its core dealmaking operations, aiming to reduce dependence on the highly cyclical revenue streams associated with investment banking.

Blockbuster IPO mandates and large-scale M&A transactions have traditionally been lucrative for City investment banks. However, a prolonged drought in London market debuts — compounded by the impact of geopolitical volatility on deal sentiment — has pushed lenders to reduce their reliance on a pipeline of marquee transactions.

Several firms have moved to build out wealth management arms, whether organically or through acquisitions, as demonstrated by Natwest's takeover of Evelyn Partners. The appeal lies partly in recurring fee income that can cushion periods of thin transaction flow. Cavendish said it intends to concentrate on expanding its broking and private markets capabilities.

The bank's board described the diversification push as a "key strategic priority" that would enable it to "support clients across market cycles." Cavendish has previously warned that geopolitical conflicts could affect its long-term growth trajectory.

Teneo was approached for comment.