Minority shareholders have attacked Kilminster Financial Management for agreeing a deal to transfer most of its advisers to Alpha to Omega, saying it does not represent good value for the company or its shareholders.
The majority of KFM’s 23 advisers will move to A2O, with the firm thought to be getting £4,000 per adviser, with a minimum aggregate payment of £105,000.
Money Marketing understands KFM is facing potential litigations of £300,000 for two misselling cases of £150,000 each and these liabilities will remain with KFM under the deal terms.
It is also understood that trail commission will be paid to KFM unless it ceases trading, at which point it goes to Malcolm Kilminster’s own firm, which is to become an appointed representative of Alpha to Omega.
Kilminster chairman Malcolm Kilminster will get £265,000 up front for selling the “goodwill” in his own practice, with a further £50,000 in six months and £50,000 in 12 months, it is believed.
KFM advisers will not be forced to move to A2O and have the option to transfer clients to another firm. A2O stands to gain around 23 advisers, taking its total to 110.
Shareholder Graham Townend says: “Anybody other than Mr Kilminster who sees the deal would have reservations about it.”
Shareholder Tony Thorpe says: “I cannot see how this deal was the best deal for the company or shareholders. As far as I can see, it was the best deal for Malcolm Kilminster.”
Former director and current shareholder Steve Gazard says: “I really do not want to be drawn on this matter but can confirm that I was one of a group of shareholders who lodged a written formal objection at the recent EGM.”
A spokesman for Kilminster says: “Malcolm Kilminster, as a shareholder of Kilminster Group, received the same terms as all other shareholders. In a separate transaction A2O have acquired Malcolm Kilminster’s practice. A2O intends to build up its own advisers division and the acquisition of Malcolm Kilminster’s highly profitable practice is key to this.
“A small number of shareholders who voted against the resolution currently owe Kilminster Group significant sums. There is ongoing litigation in this respect. Clearly, it is in their interests to find fault with the agreement.”
“Kilminster Financial Management will retain one adviser and continue to trade and to benefit from the trail commission due to the company. All other advisers have already chosen to transfer to A2O.”