Talks to sell wealth manager Wren Sterling ended with a buyout by executives.
A number of bidders were vying for the company, Financial news learned. On July 14, Wren Sterling declined to comment on the talks.
On July 21, the company announced that it had secured a majority investment from investment funds affiliated with private equity firm Lightyear Capital.
The conditions were not disclosed.
The company has been in discussions with several potential buyers and has received at least four offers, a person familiar with the matter said.
As companies in the wealth management market continue to compete for scale, Wren Sterling begins sales talks and sees a company that has taken over a number of other companies in recent years and is now looking to sell it. -even.
The company, which provides financial advice and wealth management services to businesses and individuals, manages around £ 4.5 billion, with clients in eight regional offices across the UK.
Sign of a very competitive market for wealth management companies, the offerings valued the company at least 14 times earnings before interest, taxes, depreciation and amortization (EBITDA), according to a person with knowledge of the matter.
Since splitting up and rebranding from famous broker Towergate in 2015, Wren Sterling has been operating across the UK, expanding into Northern Ireland with a new office in 2017, and strengthening his presence in Glasgow by acquiring the local company TD Armstrong Financial Planning. in 2019.
Several sources say talks have been underway since last year to sell the company, with at least one company already opting out of a deal after starting preliminary talks.
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Wren Sterling has been a strong builder in recent years, entering into a series of deals with small financial advisory firms following an injection of funds from private equity firm Palatine in 2015.
“It’s an open secret that Palatine, the backers of Wren Sterling have been looking to make their investment for over a year,” said another person close to the company. “From what others are telling me, there have been aggressive auctions and therefore a valuation of 14x EBITDA does not surprise me.”
Palatine also declined to comment on July 19.
Having received additional funding from Dunport Capital Management in 2020, Wren Sterling made three acquisitions in June this year, following another consulting firm purchase in February, which, combined, added more than $ 300 million. pounds sterling to its assets under management.
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The news that Wren Sterling could itself be taken over by another company marks an interesting turning point in the consolidation process in the UK financial advice market. With the majority of the industry still made up of a large number of smaller-scale players feeling increased regulatory and pandemic pressures, recent years have seen so-called consolidators like Fairstone, Succession, AFH and Independent Wealth Planners create larger wealth managers by picking up some of the independent practices scattered around the country.
The Lang Cat consultant director Mike Barrett said: “There seems to be a bit of an arms race.”
Another industry expert said: “There is so much private equity looking for a home, everything seems to be up for grabs and the prices are historically high.”
The wealth management industry has been given a boost in recent years as retirement freedoms have seen large amounts of unlocked wealth spill over into financial advisers, while multiple tax changes and Brexit complexities have led to more and more clients are looking for experts to help them manage their money.
Many consolidators have been backed by private equity firms seeking to cash in income that has remained strong throughout Covid-19 as more clients have sought to take control of their finances in the face of new headwinds.
Although they took a hit with inflows of funds through their doors early in the pandemic as uncertainty rocked the markets, most financial advisory and wealth management firms charge a percentage of the asset model. , which means that the income streams have held up better than the others. sectors of the financial services landscape.
Wren Sterling’s latest accounts, running through March 31, 2020, showed revenue of £ 20million, up 4%, but fell from operating profit of £ 101,000 to a loss of £ 2,000 due to increased expenses.
The company now has around 200 employees and EBITDA stands at just under £ 2million.
To contact the author of this story with comments or news, email Justin Cash