Deal of the Year: Bellpenny Acquisition of Trustee Asset Management DY150017
Deal of the Year: Bellpenny Acquisition of Trustee Asset Management Bellpenny is a national wealth management firm focusing on the provision of advice for both personal and corporate clients. Established in 2012 and backed by US private equity firm Oaktree Capital Management, Bellpenny, in July 2015 had over £3.5 billion funds under management. Having grown by acquisition, Bellpenny has completed 32 transactions since October 2012. Company: Bellpenny Name: Dominic Rose E-Mail: dominic.rose@ bellpenny.com Web: www.bellpenny.com Telephone: 0345 475 7500
Differentiated in the market-place by its unquestionable focus to providing a seamless and high quality on-going service to clients, Bellpenny are keen to stand apart from a one-off transactionary model. Clients are given access to a broad range of services that include Pensions, Trusts, IHT, Investment and Mortgage advice to mention a few, all delivered via local employed financial planners. Bellpenny do not advise clients in areas such as EIS or VCT. The acquisition of the assets of Trustee Asset Management Ltd (TAM) Completed in July 2015, the acquisition of the assets of Trustee Asset Management Ltd (TAM) and its subsidiary Tudor John Financial Services Ltd was dually led by Dominic Rose (Acquisitions Director at Bellpenny) and Bob Bradley (Managing Director of TAM). DWF (Leeds) acted as legal advisers to Bellpenny throughout the deal, all due diligence was completed by Bellpenny’s own specialised internal DD team.
Given the magnitude of the current market and the size of the transaction it is rather symptomatic of the increasing levels of consolidation that there was little impact on the market place as a result of the transaction. Bellpenny remains at the forefront of this consolidation activity. Bellpenny believes that many factors are conducive to a successful deal, the most notable being: • Transparency – i.e. vendors must be absolutely clear on what life will be like post deal and must buy into it before entering into the transaction. Hostile management teams destroy value; • Alignment of interests – deals must be structured so that the objectives of the buyer and the seller are aligned. Structuring the transaction with contingent payments linked to the objectives of the buyer are a key way of making this work; • Effective due diligence – You must know what you are buying and have validated the cost and revenue synergies each deal expects to bring.
In any acquisition, Bellpenny are keen to ensure that all transferring staff and clients are an aligned fit for the future of the company. In this instance, however, it became clear that 50% of the client facing/sales individuals were going to be better suited to their own separate company rather than the Bellpenny environment. It was agreed that these individuals would leave with their clients in order for them to form a new company outside of the Bellpenny deal. There was significant work pre-completion by both the Bellpenny and TAM teams to split the assets of the company and to restructure the shareholdings.
Bellpenny will continue to look to acquire businesses that fit their model and in the case of this transaction the sellers have settled into life well and are on track to deliver the forecasts on which the deal was based.
The success of the deal has therefore partly been attributable to the fact that Bellpenny understand that business and acquisition value can be damaged when not all staff are engaged. Rather than transfer individuals in the short term, it was amicably agreed to facilitate the divide and there remains a good relationship between all parties as a result of the upfront and fair approach taken.
Although in the short term this provides an element of pain for the sector due to some firms struggling with the shift to fees from commission; it is fundamentally a positive step for clients.
Major challenges for the industry The wealth management / financial planning sector is a cottage industry, currently driven by the on-going regulatory changes. The introduction of the sunset clause and therefore removal of commission on products sold as a result of advice given, continues to have a major impact.
As regulatory costs escalate, larger firms are increasingly looking at vertically integrated models in order to generate returns from advising clients on their investments. This comes from either platform ownership (on which investments sit and clients pay a % of the asset fee) or from the discretionary fund management side.
Acquisition International - February 2016 49