LONDON: Mattioli Woods plc announced the acquisition of 100% of the share capital of Pole Arnold Financial Management Limited for an initial consideration of £4.0 million and potential further consideration of up to £3.0 million dependent on the attainment of specified performance targets in the two years after completion.
Pole Arnold is a firm of experienced financial advisers, established in 2012 and providing highly personalised advice to circa 360 private and corporate clients with approximately £245 million of assets under management and advice.
Pole Arnold is based in Leicester and employs an experienced team of 16 staff, all of whom will remain with Mattioli Woods following completion.
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Like Mattioli Woods, the business specialises in the provision of fee-based financial planning, with the businesses complementary product offerings providing scope for potential revenue synergies, whilst maintaining the strong cultural commitment of both companies to putting clients first.
In the year ended 31 March 2020, Pole Arnold generated revenues of £2.11 million with a profit before taxation of £0.81 million. At 31 March 2020 Pole Arnold’s gross assets were £1.12 million and net assets were £0.63 million, including £0.96 million of cash. The acquisition is expected to be earnings enhancing in the first full year of ownership.
The total consideration comprises:
· An initial consideration of £4.0 million on a cash-free, debt-free basis (subject to adjustment for the value of net assets acquired) compromising £3.5 million in cash plus 72,940 new ordinary shares of 1p each in Mattioli Woods, which are valued at £0.5 million based on the average closing price of a Mattioli Woods share for the 10 days to 9 April 2021 inclusive, of 685.5 pence; and
· Contingent consideration of up to £3.0 million payable in cash on the first and second anniversaries of completion, subject to certain profit targets being met.
Payment of the initial cash consideration, deal costs and estimated net asset completion adjustment has resulted in a net cash outflow at completion of £3.1 million (net of estimated cash received on acquisition) .
Application has been made to AIM for the admission of the Consideration Shares to trading. Admission of the Consideration Shares, which will rank parri passu in all respects with Mattioli Woods’ existing shares in issue, is expected to become effective on 16 April 2021.
Following the issue of the Consideration Shares, the total number of ordinary shares of 1p each in the Company with voting rights will be 28,212,313. Mattioli Woods does not hold any Ordinary Shares in Treasury.
The figure of 28,212,313 Ordinary Shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules.
The Sellers have entered into a lock-in deed with Mattioli Woods and its nominated adviser and broker, Canaccord Genuity Limited, restricting sales of the Consideration Shares during the two years following completion.
Commenting on the acquisition, Ian Mattioli, Chief Executive Officer of Mattioli Woods, said: “We are delighted to welcome Mike and his experienced team as part of Mattioli Woods. I have known Mike for many years and admired how he and his team have grown a great business, built on a strong client-focussed culture and a commitment to going the extra mile. The transaction expands the Group’s presence in both Leicester and London, underlining our commitment to continuing growing both organically and by acquisition.”
Mike Pole, Pole Arnold’s Managing Director, added: “We are very proud of our team and the quality of service and advice that we provide to our clients. The increasing resources and regulatory burden needed to run a professional advisory business led us to explore options to ensure the long term continuity of our quality advisory service to our clients.
With a larger and more comprehensive infrastructure and support team behind us with shared values and culture, we can achieve the economies of scale to keep down the spiralling costs of regulation and compliance.
When we set up Pole Arnold Financial Management many years ago, the objectives were to provide a quality financial planning advice business and to build long term relationships and friendships with our clients and our professional connections.
We discounted a number of possible partner firms as we found only one truly shared our client and staff focussed values. We have known a number of the senior management team at Mattioli Woods for 25 years, and given their successful track record we are looking forward to joining forces with them to achieve our objectives and to secure our advisory services to our clients.
It is very much business as usual. I and my co-directors Mike Nevill, Rob Bunting and Richard Todd continue in the business, as well as all of our support team in our Leicester office”.
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