Parker Sage Independent Financial Advisers, which says it offers clients a full Financial Planning service, has three London offices including in Canary Wharf, and one in Peterborough.
Its team members Jon Cliston, Andrew Smith, Tony Goody have joined the AFH Group.
The price for the takeover is £4.5m but may be increased to £5.6 million, based on the profitability of Parker Sage over the next 24 months.
This comprised an initial £1.875m in cash, funded from the company's existing cash resources, and £375,000 of ordinary shares.
A further £3.35m in cash will be payable over the next 24 months in two tranches, dependent upon the performance of the firm.
For the 12 months that ended 31 August 2016, Parker Sage generated revenue of £2.2m of which £1.5m was recurring, and reported profit before tax of £1.2m.
On the basis of trading since September 2016 the company estimated that ongoing revenues could exceed £3m per year in the 12 month period to September 2017.
Alan Hudson, chief executive of AFH, said: "The acquisition of Parker Sage is our seventh IFA acquisition this year and will be integrated in line with our established model to enhance shareholder value during the current financial year.
“Parker Sage's directors are very successful advisers who share both our values and vision for the future of the sector. I look forward to working with them in many years to come."