UK-headquartered Kingswood has agreed to acquire Lincolnshire-based financial planning firm Admiral Wealth Management for a cash consideration of £4m ($5.59m, €4.68m).
This is the company’s first acquisition of 2021.
Admiral provides independent financial advice to individuals and corporates primarily in Lincolnshire and Yorkshire. It currently employs seven people, including two advisers managing around £100m assets under advice on behalf of roughly 600 clients.
The Lincolnshire advice firm has been established for over 30 years and led by Peter and Carol Waller and Mike Biggin.
Peter and Carol Waller have decided to retire with the former handing over his client relationships in the past year. Biggin, along with senior consultant Adam Harrison, will lead the business going forward as part of the Kingswood Group.
Finances
Following regulatory approval, the business will be acquired for a cash consideration of £4m, payable over a two-year period.
Some £2m will be paid at closing and the balance paid on a deferred basis, some of which is subject to the achievement of pre-agreed performance targets.
On completion, the acquisition will be funded from investments recently received by Kingswood from the issue of new convertible preference shares, under the terms of its convertible preference share subscription agreement with HSQ Investment, a wholly owned indirect subsidiary of funds managed and/or advised by Pollen Street Capital.
David Lawrence, UK chief executive at Kingswood, said: “I am thrilled to announce our first acquisition under my leadership and look forward to welcoming Mike Biggin, Adam Harrison, and the Admiral team to Kingswood.
“Admiral is a highly regarded provider of financial advisory services in North Lincolnshire and Yorkshire having consistently delivered a high-quality service to clients for over 30 years.”
More deals in pipeline
During its financial results for the year ended 31 December 2020, Kingswood said that it has more UK M&A deals in the pipleline.
Lawrence said in a London Stock Exchange statement on 17 June 2021: “We have a clear growth plan and with the investment made in 2020, now have the capability and capacity to deliver on this. Our immediate focus is to deliver operating margins in the UK more than 30% and a cost-to-income ratio of less than 70%.
“In the UK, organic growth will remain a key pillar of our strategy, though we will also continue to actively acquire firms that have a great cultural fit for us, can help accelerate growth and bring greater scale and capability to our wealth planning, investment management businesses. “
The firm’s UK acquisition pipeline includes:
- Five targets where the firm has agreed “heads of terms and are at various stages of due diligence”. These will introduce an additional £1.9bn of client assets and £2.7m of operating profit on completion.
- It has made an offer to four further targets and is in detailed negotiation with those companies. These will introduce an additional £1.25bn of client assets and £4.5m of operating profit if concluded.
- The company has an additional nine opportunities “where positive initial conversations have taken place and information is being exchanged”.
International non-US
Kingswood has been growing its US arm in a bid to be a national broker-dealer across the States.
But the firm also has international ambitions outside of the UK and US.
Gary Wilder, group chief executive at Kingswood, said during its 2020 results: “With the financial and strategic support of Pollen Street Capital and KPI, Kingswood is in prime position to continue to capitalise on the numerous consolidation and acquisition opportunities available across international wealth and investment management markets.”
Kingswood said in the results that it “continues to see strong growth opportunities in other international wealth management markets and is in exclusive due diligence on two potential transactions in two international markets”.
The deals would deliver a further £1.3bn of client assets and £3.2m operating profit on completion.
