Integration that is handled over an extended period allows both parties to get to know one another and achieve a gradual alignment of values and culture while continuing to grow the business. It also allows a seamless transfer for clients and staff at the acquisition stage.
At Fairstone, we understand that clients are your main priority and we will preserve your legacy and valued client relationships.
We guarantee that:
Fairstone provide a robust and comprehensive compliance network and as the regulated entity, we take on the responsibility for reporting to the FCA as well as absorbing PI and regulatory costs at group level, allowing you to focus on what matters most, your clients.
Firms in the integration phase also have immediate access to Fairstone’s range of proven growth support services that drive an increase in business performance. Our investment committee will also provide you with market-wide research and on-going fund due diligence.
People are at the heart of any relationship and throughout this period, Fairstone will continue to invest in you and your staff, providing valuable training and development to enhance skills and qualifications through the Fairstone Academy, supervision and on-going CPD support.
Value creation is based on the stability and growth of a business and by supporting partner firms to grow during the integration phase, the benefits of this approach can be seen in a commercial sense.
Across the entire portfolio of acquired businesses, we are currently seeing 116% out performance figures – with partner firms delivering more revenue, profits and growth than either their own forecasts or those upon which the buy-out agreements are made.
As part of our commitment to helping our partner firms grow, we offer a range of growth support tools which include:
The length of your integration period is firmly in your control and will be determined by how much you want to optimise your business growth and sale value.
As part of our enhanced value offering there is the ability to further increase sale proceeds after the point of acquisition by continuing to enhance business performance. Shareholders have the option to lengthen their cash pay-out period to benefit from the continued increase in profits.
Fairstone believe that one of the most valuable assets when looking to grow or acquire a people-based business is the ‘human capital’. This involves building a business model around people – from clients and the service that they receive through to staff and advisers, who should be motivated to deliver their services without compromise.
Our DBO model enables you to retain the human capital by ensuring the people involved in an acquired business remain involved post-sale in a significant capacity.
As a result of this approach, we have a 100% role retention, 94% adviser retention and 100% principal retention across all of the firms we have acquired to date.
As part of our enhanced value proposition, we offer an uncapped profit share aimed at supporting advisers to organically grow their client base and revenues.
Repeating on a five year cycle the profit share offers advisers the opportunity to earn up to 3x their annual salary at the upper boundary.
All selling shareholders are also encouraged to take on a more involved M&A role within the business once their acquisition is complete, opening up a further opportunity to create significant value and securing their long-term future with Fairstone.
Utilising Fairstone’s capital, alongside their first-hand experience of the proposition and local market knowledge, they continue to grow their hubs, identifying like-minded firms to bolt on to their businesses via our Satellite DBO model, mentoring them throughout the process.
Our valuation formula is based on 9x sustainable profits and 7.5% growth at the point of acquisition.
|Normalised profit after tax (“NPAT”)||300||750||1,500|
|Initial Capital @ 9.9%||267||668||1,337|
|Acquisition Capital @ 90.1%||2,811||7,028||14,056|
|HORIZON Profit Share||3,446||5,384||4,307|
|Acquisition Value Share||1,163||1,163||1,163|
|Total Additional Value||6,331||9,238||7,623|
|Total Enhanced Value||9,854||18,045||25,236|
Across the entire portfolio of acquired businesses, we currently average 16% out performance figures – with partner firms delivering more revenue, profits and growth than either their own forecasts or those upon which the buy-out agreements are made.
When it comes to partnering with IFA practices, we have a series of minimum requirements that we look for.
The firms that successfully join us are strong, high-quality businesses and have some common traits:
If you don’t meet this profile, we would be happy to discuss how we could help your business evolve into a new form.
We expect business owners to play a critical part in the delivery of a successful integration period, acting as an ‘ambassador for change’ within their organisation and aligning their firm with our culture.
By working together in this way, we will deliver a strong, sustainable business.