Consolidator Perspective has overhauled its approach to acquisitions following a multimillion-pound restructure earlier this year, Money Marketing can reveal.
New firms will join as appointed representatives with Perspective taking out a call option to acquire the business when the consolidator itself is sold.
The overhaul comes after Perspective agreed in June a £6m restructure that gave advisers a 38 per cent equity stake in the firm.
Perspective will acquire businesses from shareholders at six times their recurring revenues at the point of exit, measured on an Ebitda basis. Half will be paid upfront with the rest subject to a two-year earnout.
On becoming an “associate member”, clients must be novated to Perspective, with the member firm becoming authorised by the company. Firms must also meet certain criteria to be eligible for acquisition, including adopting Perspective’s investment and compliance set-up.
Member firms will pay a 10 per cent membership fee that covers compliance support such as Gabriel reporting and file checks. They will also be required to cover costs incurred by Perspective for professional indemnity cover and regulatory levies and maintain PI run-off cover for business written prior to joining the consolidator. Members will retain their existing branding but become a trading style of Perspective.
The firm had previously paid an upfront cash consideration to acquire member firms.
Executive chairman Paul Hogarth (pictured) says: “I am delighted with this new initiative, which is designed to release business owners from the less profitable and rewarding functions of running an IFA business. This will provide business owners with more time to focus on building up their client banks and enhancing clients’ outcomes, which will lead to greater profitability for their business.”
Perspective indicated its intention to revise its acquisition terms in June when Money Marketing revealed it had agreed a restructure that saw private equity backers Mosaic and Hogarth inject fresh capital into the firm.
A group of 20 advisers also pumped in £1.5m to take an increased stake in the firm.