finance 31
Thames Valley firm achieves £8.2 million deal for client
Thames Valley-based firm Herrington and Carmichael LLP advised Ascot Lloyd Financial Services on its £8.2m acquisition to cement its position in the financial services sector
In a landmark deal Ascot Lloyd Financial Services acquired the business and assets from four separate subsidiaries of IFG Group plc, a listed organisation with full listings in Dublin and London. Lead solicitor Alex Canham said: “As part of their ambitious growth strategy, this was a strategic acquisition for our client. In terms of the UK’s independent financial adviser market, this acquisition means that they have been able to significantly increase their market share by adding around £2.7m of annually recurring revenue.”
Structure and due diligence
The targets were offered through a seller-led, sealed bids tender process. Canham noted: “With only limited information available at the tender stage, it remained important to present a competitive bid which reflected the transaction’s risk profile and that bid was subject to appropriate conditions.”
Herrington and Carmichael subsequently advised on a comprehensive due diligence exercise, examining key issues including core contracts, assets, property titles, corporate structure and aspects of the deal affecting employees and financial services compliance. The initial challenge was, said Canham, “reviewing a large body of information from the four targets and identifying any issues that affected the assets they were buying. Of particular concern was the stability of the recurring income which had to be reconciled from four targets, each acquired by the group over the past decade”.
Alex Canham A unique approach
With novation of the targets’ recurring revenue a key objective, a primary goal was to ensure that revenue stream was valid and capable of being transferred to Ascot Lloyd. Canham said: “We were looking for things such as change of control provisions and terms that might effectively cause that revenue stream to be switched off. What we were looking to do was not only buy all the intellectual property rights, the client list and the associated goodwill, but to actually ensure the revenue came transferred as the short-term benefit for Ascot Lloyd was the post-completion revenue from the current list of active clients.”
THE BUSINESS MAGAZINE – THAMES VALLEY – FEBRUARY 2015
To address concerns both parties had regarding historic advice liabilities, Herrington and Carmichael devised a unique mechanism. Canham explained: “Normally with an asset deal a target’s historical liabilities are excluded, but in this case, to ensure that customers benefited from the change of control, a bespoke claims handling arrangement was created with claims management and financial liability being apportioned between the parties. Here it was particularly important to clearly define Ascot Lloyd’s responsibilities to clearly set out the extent of their involvement.”
The value of teamwork
Much of the compliance due diligence was undertaken by Ascot Lloyd in-house, with Herrington & Carmichael providing general legal due diligence and regulatory support. Canham said: “The relationship with our client was key throughout and our understanding of their business and commercial concerns enabled a targeted
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It was, said Canham, a very challenging goal: “Terms had to be mirrored across the four simultaneous acquisitions, and the consideration payments needed to reflect a consolidated payment structure whilst being mindful of multiple client portfolios spread across what were effectively four separate businesses.”
approach and swift advice where the in- house team looked for clarification.”
Head of corporate Yavan Brar highlighted that “the deal was indicative of the transactions that the firm had encountered since the FCA’s Retail Distribution Review, but it also called on the wider M&A experience of the team generally”.
Herrington and Carmichael’s ability to draw on firm-wide expertise was also important to the success of the deal. The corporate team lead the transaction with support from the firm’s financial services specialist, Mark Chapman, and the employment and real estate teams. This teamwork, a sound working knowledge of its client’s business sector, and a willingness to develop unique and inventive solutions meant that they could work to the strict timescales set by the seller.
Richard Dunbabin, Ascot Lloyd CEO, said: “Herrington & Carmichael provided clear and pragmatic advice and guidance throughout the whole process. The acquisition has been an important geographical and strategic addition and ensures the continued dynamic growth of Ascot Lloyd. The new business has added three new offices to the Ascot Lloyd network – Manchester, London and Cambridge.”
In 2012 Ascot Lloyd acquired Ensors’ financial services business which included a commitment to provide financial services to Ensors’ clients in East Anglia. Dunbabin noted that “the business acquired
from IFG has provided us with additional offices and additional high-calibre advisers which will enable us to more effectively support our clients”.
Details: Alex Canham 0118-9774045
alex.canham@
herrington-carmichael.com www.herrington-carmichael.com
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