View more on these topics

Perspective reveals new acquisition terms

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.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. The new proposition looks exactly like the proposition my business signed up to in 2009. Unfortunately my decision to join The Perspective Financial Group very quickly turned out to be a disaster professionally and financially.
    Six months after completing the deal I can remember being escorted from their head office building after being dismissed by the then MD and as we descended the stairs towards the entrance door I can vividly recall him informing me that ‘ this is not personal it is business’
    Maybe things have changed there, they certainly have for me !

  2. So your firm becomes an Appointed Representative of Perspective, commits to branding, and looks to piggy back on the sale of Perspective.

    Great in theory, but look at the team’s track record on selling Networks. ISL (the Network element of Bankhall) Members and Staff were given very short notice that it was being closed (many Members and Staff read about it in the Press on the day they were told). It was not sold, it simply sought de – authorisation. Paradigm Network was sold to one of its Appointed Representatives as “it didn’t fit Paradigm’s model”. The sum was undisclosed, but I’d be surprised if it reached 6 times anything. Happy to be corrected.

    Perspective have tried and failed to float and also prompt a trade sale within the last two years. .

    The concept of working as a team to achieve a defined exit is sound, but I would think about the Principal’s ability to deliver on that exit and your ability to reverse out if it becomes apparent that they can’t deliver, and the impact that other Appointed Representatives can have at the due diligence stage. There are safer and more flexible ways to aim to achieve a 6 times valuation.

  3. @ David B – all very well made points but you surely need to include the sale of Bankhall as a positive part of a track record particularly given that some of the proceeds of that transaction went towards supporting your new, very successful, venture.

  4. Why does anyone take this outfit seriously?

  5. Money Guidance CIC 4th September 2014 at 3:13 pm

    Fair`s fair – how about a put option for the prospective vendors to even things up?

  6. @Bert Poppins Thanks for the kind words regarding threesixty.

    Bankhall was a very different team to Perspective, and the Network represented a smaller element at the time of the sale to Skandia. The SECOND (initially sold to an IT company) time that the business was sold certain Providers were convinced that the intermediary market was going multi tied (I wasn’t) and that they should buy in to distribution companies and subsequently sell elements to other Providers who would simply be lining up for a piece of the action. Of course, this never transpired and a few years later a THIRD “sale” was completed; this time to Sesame. I think that we are all have a reasonable idea of the “multiple” on that deal.

    You can never say never, but I would think that buyers are a bit shrewder now.

    I meant to mention in my previous comment; I was interested to spot in a Perspective purchase agreement that the liability for advice remained INDEFINITELY with the seller (the AR owner). Whilst insurance is arranged the excess (in this case £5000) remains the responsibility of the AR FOREVER. In most sales this drops away after 2 years but not if you sell to Perspective based on this agreement. Of course it may have been updated now as part of this re launch?

Leave a comment