Listed wealth management firm Spring Financial Group (Spring FG) today announced the acquisition of specialist superannuation and retirement business Financial Choice, saying the purchase will help strengthen its SMSF capabilities and services.
The acquisition will add $325 million of assets under advice to Spring FG and take its gross assets under advice to around $850 million.
Financial Choice was established more than 20 years ago and provides financial advice and dealing services, including SMSF advice and administration, to retail, wholesale and SMSF investors in Sydney and Melbourne.
“Financial Choice has a depth of experience in developing and managing model portfolios for SMSF trustees that will further enhance Spring’s offering,” Spring FG founder and managing director Keith Cullen told selfmanagedsuper.
“The combined knowledge base of the two companies offers great benefits for both Spring FG and Financial Choice clients.”
Spring FG said the acquisition was expected to contribute $1.8 million a year of recurring revenue and more than $1.2 million of earnings before interest, tax, depreciation and amortisation.
Further, the pro-forma impact on its 2016 financial year actuals would represent a 52 per cent increase in net profit after tax to $2.43 million, before considering revenue synergies.
As part of the agreement, Financial Choice founder and chief executive Russell Medcraft will join Spring FG in an executive capacity post-settlement to assist with the merger of the business and operations of Financial Choice with Spring FG.
Cullen said the acquisition would further broaden the group’s revenue profile, as well as its assets under advice.
“Financial Choice also has a diverse client base with a concentration of around 2000 high-value clients augmented with around 15,000 retail account holders from historical corporate super programs,” he noted.
“We see a significant opportunity to broaden services to this group and unlock value for them and from them.”
Spring FG has agreed to pay $2.5 million by way of cash and vendor shares at settlement, which is expected to take place in April.
Settlement is subject to final company and bank due diligence by Spring FG.
A second deferred payment of $1.3 million will be paid in October.