Financial services company Centrepoint Alliance Limited (ASX: CAF) is set to acquire Brisbane-based financial advice firm Financial Advice Matters (FAM). The $10 million acquisition of FAM is forecasted to add significant revenue to Centrepoint, expand its team of salaried financial advisers to 19, and create a financial advice group with the scale to expand in other locations.
FAM offers clients a full range of financial planning and advice services to approximately 1,450 client households with Funds Under Advice (FUA) over $1 billion. It operates eight offices throughout Queensland and generated revenue of $6.1 million in FY23.
Centrepoint Alliance’s Chief Executive Officer John Shuttleworth said, “I am delighted by the opportunity this acquisition offers Centrepoint Alliance. It fits with our strategy to accelerate growth by executing targeted acquisitions of high-quality businesses aligned to our strategic framework. The FAM Team have a proven track record helping many Australians by providing quality financial advice.”
In FY23, Centrepoint’s revenue stood at $271 million, with its net profit amounting to $6.3 million, a minor decline on FY22’s $6.5 million. Its operating cash inflow declined from $7 million to $4.1 million. Two directors, Alan Fisher and Sandy Beard, resigned in the same period. Tightening regulations and advisor exits created a stressful environment, urging the Company to focus on increasing revenue streams.
Shuttleworth added, “FAM is a corporatised advice firm with a strong cultural fit with our existing network of financial advisers and has the business systems, processes and operating scale to provide a platform for further expansion of this important segment of the market.”
FAM became a corporate authorised representative of CAF subsidiary Alliance Wealth in 2015. Since then, it has grown and contributed to the Centrepoint Alliance community.
The total potential consideration for the acquisition is $10 million in cash, funded from CAF’s existing cash reserves and newly established debt facility with the National Australia Bank. 80% of the consideration will be paid upfront, and the remaining 20% is subject to deferred incentives and performance hurdles over the year. It is based on a minimum EBIT contribution of $1.5 million. The Company anticipates that FAM will contribute a full-year EBIT between $1.1 million and $1.5 million in the first twelve months of operations.
Managing Director of Financial Advice Matters Group, Darren Smith, commented, “This is an exciting development and reflects the realisation of our vision since joining the Centrepoint group back in 2015 as a corporate authorised representative. Over the last 8 years we have worked closely with the Centrepoint group and there is strong cultural alignment and mutual respect. The group recognises the cultural strength of what has been built up under the Financial Advice Matters brand and is looking to use it as a platform for further growth.”
The acquisition is expected to be completed by December 1, 2023, with its outcome to be evident in the FY24 report.
Alinda is a Business Reporter for The Sentiment
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