Fairstone Group  

Fairstone secures £60m Aum in first acquisition of 2021

Fairstone secures £60m Aum in first acquisition of 2021

Fairstone has finalised the acquisition of a Berkshire-based advice firm which secures more than £60m in assets for the national wealth manager in its first deal of the year. 

Hammett and Petch Financial Planning first joined Fairstone via its downstream buy-out model in 2017 and will now add two advisers to the business. 

Fairstone's acquisition model sees it take a stake in an advice firm before integrating and then purchasing it, typically over a two-year period. 

The deal brings with it 300 clients and gross fee income of £800,000 alongside funds under management of more than £60m. 

Lee Hartley, chief executive of Fairstone, said finalising the deal with Hammett and Petch had kick-started the company's growth plan for 2021.

He added: "I can say with confidence that Fairstone remains in a superb position to deliver continued growth throughout this year and far beyond." 

Newcastle-headquartered Fairstone operates from 42 locations across the UK and added more than £1.3bn to its funds under management via its downstream buy-out model last year. 

In November last year the company told FTAdviser it had spent an additional £5.4m on acquired businesses which exceeded their initial target value over the past nine years. 

In earn-out data for the 45 companies integrated into the Fairstone model since 2011, one in six companies joining via the downstream buyout model received more than 135 per cent of the original sale value.

On average, sellers received 111 per cent of the initially agreed price, with almost a quarter of advice businesses receiving more than 20 per cent above the original transaction value.

"Race to completion"

In the wider advice market some have predicted a "race to completion" in the first months of this year amid an expected spike of advice firm sales. 

The initial fallout of the coronavirus crisis saw some step away from the acquisitions market, whilst others proceeded full steam ahead undeterred by the upheaval of lockdown and market volatility. 

But at the end of last year Louise Jeffreys, managing director at introducer Gunner & Co, told FTAdviser the advice market was likely to see more of the latter in the first quarter of this year. 

Ms Jeffreys said the speculation around changes to Capital Gains Tax and the potential impact on the taxation of transactions meant buyers and sellers were "more focused than ever to get deals finished".

Gunner & Co itself is expecting 75 per cent of its annual transaction volumes to happen in the first quarter of 2021, with Ms Jeffreys hinting at a continued hike in sales throughout the rest of the year and into 2022. 

rachel.mortimer@ft.com