Gary Keyes: We first began to think about an acquisition three years ago, when founding director John Collins retired as chairman of Adams Tingle. As the managing director, I realised that, in order to progress, Adams Tingle needed something more. Regulation around pension selling had created immense pressures on John and further FSA clampdowns were making life difficult, especially in view of the consolidation that was going on elsewhere.
As a large local IFA but a pinprick on a national scale, we simply wanted to take more control of our future. We decided to try to make some acquisitions to strengthen our hand or be acquired. We bought a few small intermediaries but, while strengthening our experience, it wasn't really enabling us to make any commercial headway.
Gary Keyes: We were approached by several consolidators, including Jon Everill of Destini. However, we wanted to see how things developed at first, particularly with Destini.
Adams Tingle's parent insurance broking business also began looking for a partner and this crystallised our decision to sell. We also saw high-profile businesses being acquired by Destini, such as Fiona Price & Partners, and that made up our minds. At the time, we had a turnover of £730,000, four registered IFAs and a total of 11 staff.
Jon Everill: What is Destini looking for in an acquisition? Two things mainly. First, we do not tend to look at companies with less than half-a-million in turnover unless they have exceptional potential in other areas, such as specialist knowledge. Second, it has to be a good cultural fit with Destini.
We also look for companies that are not tied to a network, who are independent and can take on board things like sharing office space, cutting overheads. A good claims history is important, too. Adams Tingle met all these criteria. It is a very profitable, well regarded and established business and it shared our mindset, which is based on integrity, innovation and extensive knowledge of the marketplace.
Our due diligence process often starts with an enquiry through the website or one of our team will produce a lead. David Collett or I have an initial meeting with them and get all the background. If it looks promising, our acquisitions team swings into action.
Jon Everill: Our acquisition team started its visits to Adams Tingle in mid-April to carry out its audits. The team included:
Jon Warburton, actuary – investigates fee trails and renewals.
Jonathan Pouteau, compliance – audits everything regulatory and FSA-related.
Graham Philips and Janet Gillespie, accountants – check all the accounts.
Bob Hazell, IT – makes sure the IT equipment and knowledge is up to scratch. (One infamous, anonymous prospect included an IFA who did not know how to work a spreadsheet.) Our director of compliance audited on April 14 and submitted a change of control to the FSA on the same day. Our project manager, Teresa Bristol, collated the results of the acquisition team's work and gave this report to David Collett and myself. We prepared an offer letter and, after a period of negotiation, we reached an agreement. Teresa then raised the heads of agreement, which were issued on April 30.
Jon Everill: The heads of agreement were agreed and signed on May 13. From this point, and depending on solicitors, the process can take anywhere between a few weeks and a few months to complete, depending on how quickly we receive FSA approval.
The company being acquired has to complete its own due diligence process, which is basically an in-depth questionnaire. The responses and support information they have to provide is extensive fairly time-consuming and can run to around eight inches of paperwork.
Gary Keyes: The due diligence period we had to go through was very demanding. It is a laborious process. Typically, I would spend the day doing my normal job and then spend the evening emailing and filling in forms, compiling all the information that was required. This meant the job basically became 24/7 for weeks on end.
However, you find out so much about your business that you did not know before. You are forced to examine and question everything and it throws up information and outcomes you would not have thought possible.
Obviously, this created a strain on my home life, too. My wife was a wonderful support – she just bit her lip when I was stressed or cranky and rolled up her sleeves to help me. My daughters, Sarah (29) and Julie (26), although grown up now, were also very supportive and excited by the process. Julie is a counselling psychologist – a handy skill at a time like this.
The other main concern we had was that we did not want to be underhand with our staff. We wrestled with the decision over whether to tell them for some time. We wanted to make sure people were as informed as soon as possible. But ultimately we decided not to tell them until after we completed. We felt that if it did not happen and they had been told, the risk of disruption to the business was even greater.
Jon Everill: We had a few concerns because the original target completion date was June 30, to tie in with the sale of Adams Tingle (Insurances), which was not part of our transaction. However, as we had not received FSA approval, we could not complete and so the sale of Adams Tingle (Insurances) was then delayed until July.
Gary Keyes: We were pushing through two deals at the same time. The Folgate Partnership was buying our insurance division and Destini was buying the IFA business. So the legal procedures were quite tricky and time-consuming to negotiate. Ideally, we would have liked to have retained the two businesses under one roof but it became obvious we needed a best-of-breed solution and we were happy we found the right partners for both businesses.
Jon Everill was our main point of contact and I found him extremely easy to deal with and very well organised. It was a major plus that he has a background as an IFA, as he understood and appreciated our concerns right from the start.
We wanted to be confident in Destini's ability to handle the deal and understand our business. We certainly got that sense from Jon.
Jon Everill: We received approval from the FSA on July 6. We officially completed on July 29 at 4.45am after an all-night session with us, Adams Tingle and our respective solicitors going through the contract, point by point. The sale of the insurance business was completed shortly afterwards.
Gary Keyes: After initial meetings between Peter Robinson (insurance broking managing director), Destini chief executive officer David Collett and myself, we signed the agreement on July 29. It was not a quick process. I arrived at Hewitsons, our local solicitor, at 9am and left at dawn the next morning.
That same morning, we informed our staff through a series of team and individual meetings. Anne Whittaker, our company secretary, had been heavily involved with paperwork on the deal. On the day we announced the decision, she had spent the day clearing her desk of the accumulated papers. Everyone thought she had been fired but were too polite to ask her.
Jon Everill: After completion, we distributed pre-approved Destini co-branded stationery and any other marketing collateral the acquired company needs. We also held a “Welcome to Destini” presentation morning. I then worked with the new Destini member company on a business plan, tailored to both the needs of the company and the Destini way of thinking. I also introduced them to other specialists in the Destini group and got them involved in group-wide debates and discussions about how to improve our services.
For example, Gary Keyes has been playing a prominent part in the scanning paper committee, which aims to reduce overall paper usage. He has led the debate and made some great suggestions on how to improve.
Overall, we are extremely happy with the Adams Tingle acquisition post-completion. It has been our star business for two months running and in August it posted a £59,000 net profit, which is absolutely stunning.
Gary Keyes: Since completion, things have been great. There is little change day to day but it is good to know we have what we wanted, which is a much greater footprint in the market and more security for our clients and staff.
Because the Destini procedure was so good from the start, we have had no problems integrating, either operationally or culturally. That has been the great thing -because the process was so well researched, the reality has been pretty painless.
And I think everyone is happy with the performance of the business, too.