Target Overview

AN EXPERIENCED GROUP OF WEALTH MANAGEMENT PROFESSIONALS

Founder & CEO

Founder of the UK-FA Group and an industry veteran with 10+ years of experience in wealth management. He has grown the UK-FA Group into a €19 MLN business in only 2 years.

Managing Director

Bringing 27 years of experience working in the IFA sector in various senior executive roles.  As a compliance manager, he has overseen over 2.000 wealth managers for major British IFAs.

Non-Executive Chairman

He is a specialist in international taxation for the banking sector with over 30 years’ experience advising global banks and multinationals on acquisition strategies. 

Member of the Board

He is a financial services industry expert and innovator who built a thriving Lifestyle Financial Planning firm in Sweden.  His expertise will be used by UK-FA to grow further in the financial life planning niche across Europe.  

Senior Pan-European Advisor

Founder and former CEO of one of the largest IFAs in the UK with £7 BLN under management.  While there, he completed thirty acquisitions in the years 2004-2017.

Group Finance Director

Finance and treasury specialist with 10 years’ experience.  His significant experience in change management and transformation will help the group identify and develop the synergies that arise from recent and future acquisitions. 

Operations Director

Operations Manager with more than 20 years of IT and telecommunications experience.  A specialist in steering the creation and maintenance of sales and operations teams. 

Target Summary

UK-FA is currently running at approximately £1.8M EBITDA base, and has signed Heads of Terms, as mentioned, with a third acquisition, and we are also close to signing Heads of Terms with a fourth potential target of larger size. The momentum in our deal sourcing is continuing to build. We will be able to build further on that momentum, with our existing corporate bond offering. Our goal is to close these two acquisitions before year-end. Then UK-FA will be at an approximate run rate of £5.0M EBITDA for 2020. For many acquisition strategies, finding deals is challenging. Due to UK-FAs network and established management team, finding deals is not daunting. We are currently being inundated with opportunities.

 

The main driver behind the significant growth in 2020 is the acquisition of two further IFAs. One of these has a substantial synergy with the group; firstly, they don’t have their own investment proposition, and will instead utilize our DFM services going forward for existing and new clients. Secondly, the company also has a significant shortage of advisers to be able to deal with the current opportunity which is exclusive access to several thousand potential clients, through an agreement with unions across the UK. The unions are recommending this firm to deal with retirees in workplaces nationwide. Historically, these leads have led to a 40% conversion rate, which would be expected to drive at least a doubling of the current UK-FA size. Management has chosen to remain prudent and not included this in the current forecast, until such a time that we have completed this acquisition, which is currently in an advanced stage.

Key Point Summary

  • UK-FA is exploiting significant opportunities in the UK IFA space.
  • We have the right team in place to execute the strategy. We have concluded our first two acquisitions. We already realizing synergies. We have two further acquisitions in the pipeline.
  • The fragmentation in the market supports a successful acquisition strategy.
  • The pricing premium, (smaller units at 6-7x vs larger units at 10-12x) for larger size EBITDA units is significant and can be leveraged.
  • The average age of an adviser in the UK, 58-years, will result in a shortage of quality advice in the coming years which will further support UK-FAs growth.

UK-FA Transaction and Return Targets

    • UK-FA’s goal is to re-finance our existing amortizing debt with a bullet paying corporate bond issue of €20M, which will also fund our existing deferred considerations from acquisition one and two, as well as fund the considerations for acquisition 3 and 4.
    • UK-FA’s is working towards building a £20 million EBITDA, and a £200-250M market cap, wealth management business in the UK over the next 3 years.
    • UK-FA is offering investors an attractive 7% interest with quarterly payment over a 5-year maturity

Target Strategy

THE UK-FA FORMULA

BUY – BUILD – GROW

The UK-FA Group’s business model is simple, effective and based on 3 pillars:

A Proven “Buy and Build” Acquisition Strategy

The UK-FA Group acquires established and profitable British IFA businesses with no debts and a stable client base. We target IFAs with EBITDA of €1-3 MLN and a strong client focus.

A Strong Growth Trend

Through our acquisition and consolidation strategy, we aim to increase our EBITDA from € 2 MLN in 2018 to an expected €23.8 MLN in 2022 – an increase of more than 800%.*

EBITDA Margin

High Profit Margins

The UK-FA Group generated a 30% EBITDA margin in 2018, compared to 16% for the average IFA. Our acquisition strategy targets only IFAs with at least 30% EBITDA margins.

*Based on run rate numbers ** Expected growth EBITDA

Investment Modeling

Anticipated Business Market Value:                    £ 14,924,000     to      £ 18,241,000

Add: Real Estate                                                                         £  0

Final Value will be based on appraisal

Add: Net Working Capital Requirement                                   £  0

Based on the last 12 month average or negotiated

Total Consideration:                                                 £ 14,924,000     to      £ 18,241,000        

Acquisition of 27% Equity Position:                    £ 4,000,000     to      £ 5,000,000

Add: Anticipated strategic growth funding                             £  0

Employed as a credit facility to fund growth

Add: Anticipated Transaction Costs .                                  £  25,000

Estimated Total Fund Capital Employed:              £ 4,025,000     to      £ 5,025,000        

Target IRR minimum                                                                18%

Target Hold Time (years)                                                           7

Target Forecasted Exit Value:                                £ 44,531,000     to      £ 48,122,000