Nick Dignam from Fortitude Investment Partners shares insights with Lachlan Maddock from Fortitude Investment Partners on how a diversified portfolio in mid-market private equity is structured. The Inside Adviser
The world of alternative investments is at a crossroads. As markets defy expectations and liquidity concerns take centre stage, investors find themselves forced to rethink how they deploy capital in an increasingly complex environment.
Consolidation continues as WT buys Synchron
The financial advisory market is set to have a new leader when measured by financial adviser headcount, with WT Financial Group’s decision to acquire licensee company Synchron set to create the “largest non-institutionally-owned financial adviser network”.
Completion of the deal, which an announcement to the ASX indicated was for consideration of up to $7.96 million, marks another step in the evolution of a long-standing industry player. After being founded in 2010 and listed on the ASX in 2015, WT has emerged from a direct to consumer or retail advice past, to become a leader in licensing, compliance reporting and support for non-aligned financial advisers.
Before the deal the group had 220 registered advisers, or Authorised Representatives, operating 190 practices across the country, a jump from just 42 in 2018. Following the deal, this will increase to 600 advisers and approximately $16 billion in assets under management. Whilst details of the exact revenue multiple paid for the business are scant, the announcement highlights that the ‘goodwill value’ of the deal represents a multiple of just one times revenue or 5.5 times net profit.
The group will emerge as the third largest licensee of advisers behind AMP and IOOF, and retain their commitment to deliver risk insurance advice despite growing pressure within the industry. They group has some $25 million in insurance premium sales per annum and continues to believe in the important of improving the underinsurance issue in this country.
As expected synergies are central to the benefit of the deal, with a $7m earnings contribution and $4 million profit addition expected in 2023 as expenses like professional indemnity, compliance and training can be combined.
