Delivering five layers of enhanced value – without compromise

Company News

17 May 2022


Dennis Reed

We have been successfully bringing businesses into Fairstone for 10 years now and often people believe (wrongly) that our model is similar to other acquirers.

The fact that we have built one cohesive business around 50 acquisitions is the acid test to our success in doing things differently.

At Fairstone, we embed value into our proposition; supporting businesses to partner and grow with us, share the organic growth we create together and be the best version of what they can be. Put simply, we know that we will create more value together than apart…and we have the figures to back that up too.

Our unique DBO acquisition model unlocks five layers of enhanced value for a business looking to join us, rather than a single sale event, which can deliver overall value equivalent to between 12 and 18 times current profits.


Achieve your optimised sale value

Firstly, when we partner with a firm, their valuation is based on a multiple of their ‘true profit’ and that in itself is a unique approach within the sector.

Working together we then provide funding and support to drive growth and increase profits, which means that business owners can deliver optimum secondary acquisition value based on their heightened profits.


Increasing earn out payments

This commitment to investing in the growth of our partners is also demonstrated through our unique approach to earn outs.

Increasing profits during the earn out period are factored into the calculation of uncapped additional capital payments enabling selling shareholders to optimise their sale value.

As a result, every single one of the firms that we have acquired are achieving their target sale values and receiving pay-outs that far exceed their original aspirations. On average the firms that have joined us have banked 116% of their initial sale value, some a great deal more, and most importantly, none have received less than 100%.

These results are unprecedented anywhere in the wealth advisory space and are a direct function of investing in growth ahead of the ultimate acquisition and then sharing the upside that comes from continued success.


Highly attractive levels of income

Also, very often when a business is sold, that coincides with the retirement of the shareholders, but we actively encourage the opposite…. we don’t want to close offices, get rid of staff or change the client experience from a charging or advice perspective.

That long term partnership focus allows sellers to access a third layer of value, as they can maintain high levels of income and bonus after the point of sale and preserve the banked capital.


Five year rolling profit share

We are a firm believer in not leaving any value on the table, which is why we feel that adding value to a business shouldn’t end with acquisition. When we acquire a business, we look at it as bringing in long-term partners into the Fairstone family ….to work with moving forward.

Supporting this we have recently launched a profit share initiative which gives the potential to pay out between two to three times annual salary for advisers over a rolling five-year cycle, creating very significant and long-term additional value which sits above and beyond salary and bonus.


Create long-term value

And to unlock a fifth layer of value, we have created a new corporate director role for the principals of the firms we have acquired.

With on-going acquisition capital, our corporate directors can utilise their knowledge and expertise to identify like-minded businesses and make satellite bolt-on acquisitions, creating long-term and uncapped value. After all, nobody knows the calibre of firms in their local area that would be a good fit for Fairstone better than our colleagues who have sold their firms to us.

And after acquiring businesses for the past 10 years, we have the best ambassadors for our business and our proposition that we could possibly want – 50 business owners who have been through our process themselves.

They have chosen to partner with Fairstone, sell to Fairstone and to stay with Fairstone.

I can’t think of any better endorsement.


Delivering five layers of value

Don’t underestimate the value of your business, speak to one of our M&A team today to discuss starting your Fairstone journey.

Learn more Contact our M&A team

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