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Garry Heath seeks £25m for IFA consolidation vehicle

IFA stalwart Garry Heath is looking to raise £25m to fund an adviser consolidation vehicle.

Financial Inspirations will target IFA firms with a turnover of between £1m and £10m and a net profit of 10 per cent to create an IFA business with widespread coverage in the UK, the Republic of Ireland and, in time, Europe.

The vehicle will consider firms below this profit threshold but the firm says it is unlikely that add-ons with less than £500,000 would be cost effective.

Working alongside Heath on the venture as chairman is former Winterthur Life UK chief John Finan and financial director Alistair Hollows.

Heath was formerly director general of the IFA Association and built up and sold two national financial services businesses.

Heath says the team has taken lessons from large adviser businesses around the world over the past year while shaping the new vehicle.

He says: “We’ve seen all over the world and have one particular example in the UK where the company was brilliantly successful until it actually went public and when it went public the City demanded that it had a big head office in the middle of town and the day that happened the business started dying.”

As such Heath will seek to have widespread national coverage but is keen to ensure the firm’s head office of business is kept “as small as humanly possible”.

He says: “We noticed that people acquired a sum of money and then had gone around buying things without taking a long term view on how the collection of these units was going to be managed or if they made sense to the clients.

“Our view is that we have a plan and we are going to find companies that slot into that or can be grown to fill that role. Otherwise you’re importing problems, you add huge quantities of cost and it makes it hugely difficult to manage.”

Though the economic downturn slowed the funding process, Heath remains focused on the firm’s strategy and says IFAs will need to be part of a bigger organisation in order to be sustainable to the market and the regulator.

He says the firm is in talks with a number of serious players regarding financial backing, who are “not currently product providers”, but “normal commercial companies and private equity types.”

On IFA targets for the firm, he says: “There are plenty of potentials there. It is fair to say some of the ones we’d most like to have are probably sitting on their hands for the next year or two hoping the market will improve and therefore their multiples and profits will improve and they’ll get more.

“We understand that but we don’t necessarily want to buy them all in an afternoon so we can get going in our own time and in our own way. After all we don’t want to be hurriedly throwing something together as we have seen that done in the past.”

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