In Focus: Profitable advice business  

Beaufort PE buyer eyes more deals in push for consolidation

Beaufort PE buyer eyes more deals in push for consolidation

Solomon Capital's Andy Thompson has said he is already in "well-advanced" discussions with half a dozen other advice firms after announcing the deal to buy Beaufort Group.

The former chief executive of Intrinsic said these businesses, together with Beaufort, would eventually be brought together under a single brand.

The deal is Solomon's first step towards creating a national advice business serving more than 50,000 clients.

Thompson did not shy away from the fact Solomon Capital was a consolidator. He said: "We all know the industry needs to be consolidated. It is not currently sustainable in terms of building robust advice models.

"For some people that is just about getting some independent businesses under an umbrella but that’s not where we are coming from. It is about creating a single brand, collectively on the same technology. It is not just a growth story but a transformation story."

Thompson said his business's commitment to technology was highlighted by the fact it had received backing from JC Flowers - the American private equity house which backed Interactive Investor until it was sold to Abrdn.

Explaining Solomon's approach to technology, he said: "Up until now too often there has been a choice between choosing one of the market leaders [for back office technology], who do a bit of everything but some things better than others, or you go with a best-of-breed approach and use different companies, but the problem is they don’t talk to each other.

"Our ambition is to invest in doing the plumbing and the work to make sure they talk to each other.

"The problem is that advice firms don't have the kind of profit or level of investment to pay for that technology  - and what I do think is unusual about us is that most private equity backing tends to be focused on M&A. It is less normal to have an investor like JC Flowers which is focused on tech transformation."

Thompson founded Solomon last year with Darren Sharkey, who until late 2020 was managing director of Quilter's national advice business. 

With the Beaufort deal, Solomon now owns an advice business and a discretionary fund manager but Thompson said his business was not interested in buying a platform - which would traditionally make up the third leg of a vertically integrated business.

He said: "I don’t think a platform is a key requirement for us. I think there are some great platforms out there."

Following its acquisition by Solomon, Beaufort's chief executive Derrick Dunne and co-chairman Simon Goldthorpe will remain part of the company's executive team.

Goldthorpe said: "The deal was a natural progression. I never made any secret of our plans to raise cash.

"We weren’t looking to be acquired but when we met Andy and Darren, their conversations were as if we were part of the same business already.

"We like that they have significant backing from JC Flowers. It was a very easy decision to make."