Listed IFA AFH Financial has acquired Stroud-based IFA Independent Financial Services for a maximum consideration of £4.1m.
The maximum consideration payable by AFH is £4.1m based on the performance of IFS over the next 30 months, and it is estimated a further £500,000 of restructuring and integration costs will be incurred by AFH in the current financial year.
The consideration of the acquisition is to be met through a combination of cash and the issue of new ordinary shares in AFH over the 30 month earn out period.
AFH Financial said that the initial consideration has been satisfied by a cash payment upon completion of £450,000, funded from the company’s existing cash resources.
A further deferred consideration of up to £3.65m will be payable, 50 per cent in cash and 50 per cent in consideration shares, and are to be issued at average market price of the five business dates prior to each payment date over the next 32 months in three tranches, dependent on set performance criteria of IFS over the period.
IFS has 35 independent financial advisers alongside a number of national affinity group relationships.The firm’s revenue amounted to £3.09m for the year ending 28 February 2015, and profit before tax amounted to £230,000.
The transaction marks the company’s largest to date and was completed yesterday (30 April).
This follows news last month that the firm’s funds under management had passed £1.25bn.
Since AFH Financial’s June Aim listing, IFS is the firm’s tenth acquisition, adding approximately £400m funds under management to the company, taking its total funds under management to approximately £1.7bn.
Alan Hudson, AFH chief executive, said: “Today’s acquisition signifies another key milestone as both our largest to date and our first of a national firm, taking our total estimated funds under management to £1.7bn.
“Independent Financial Services represents a significant paper-based transaction with protection for existing investors against excessive dilution and provides excellent geographical synergy to the company’s current advisers We look forward to welcoming all new joiners as we head into another progressive period.”
ruth.gillbe@ft.com
