Business Insights Report
Eastern Metro Melbourne Financial Planning & Risk Practice
Financial Planning Risk $1m-$3mDeal Overview
EBIT
$419k
Revenue
$894k
Client Numbers
254
Terms
Share Sale
Price
$2.64 Million
Financials
Client Age Demographics
Business Details
Business Overview
This is a Financial Planning and Risk Firm that operates in the North Eastern Metro Region and began over 17 years ago. The business is owned by a director and there are 5 additional support staff.
Summary Statistics
254 Clients
$880k Recurring Revenue
$201m Funds Under Management of which $153m (77%) is traded and listed on ASX.
Business Opportunities
• Most new clients are sourced via referrals from existing satisfied clients.
• Through a close and ongoing association with an independent accounting firm, the business has assisted many Accounting clients with financial, insurance, and retirement advice. It is a high priority of both the vendor and the Accounting firm that the relationship be maintained going forward. It is estimated some 25% of the businesses clients originate from the Accounting firms referrals.
• The independent accounting firm recently acquired an Accounting only book with approximately $1.5 Million in Recurring Revenue. These clients are all High Net Worth and have not been exposed to Financial Advice. These clients would create an excellent opportunity for Revenue Growth for the purchaser of this business.
• The ‘high touch’ business model with value adding through specific advice around ASX listed direct equity (corporate actions, capital raises, takeovers/mergers) differentiates the value proposition from that of many other wealth management firms.
• Client retention and tenure of relationships confirms and validates the business model and value proposition. Staffing is stable and client relationships have been successfully transitioned to other advisers from the principal.
• Movement to 100% fixed fee remuneration over the 12 months to 30th June 2022 will stabilise income and remove exposure to market or economic movements.
• Client fees on the whole are considered below market average. The opportunity to increase fees closer to market rates through the newly embedded Annual Fee Agreements process presents itself from 1st July 2022 onwards.
• Potential to move to SMA or Model portfolio’s to improve efficiencies and/or increase revenue.
• As of September 2021, office premises have moved to ‘month to month’ lease so no limitation on the physical location of the business.
• All business processing systems are cloud based, with (i) high quality electronic client records maintained via the Xplan interface, and (ii) internal business records and processes maintained through Dropbox for Business – so can be accessed from anywhere at any time.
• Self-Licensed
• Excellent compliance history
Reason for Sale
Pending retirement of principal due to both age & a recent illness. The Principal does not wish to retain any ongoing role within the business having successfully transitioned his clients to other advisers in the employment of the practice.
Transition
Given health condition, the vendor is looking for minimal involvement throughout the transition period. It would most likely include necessary processes around handover of the company’s management. The vendor has no ongoing client contact currently, and all clients have already been handed over to the additional adviser. The vendor has also already surrendered ASIC authorisations.
Terms
Share Sale
Price Required
Indicative offers subject to due diligence are invited; we expect offers to be around a multiple of 3 times Recurring Revenue plus.
Purchase Price ~ 3 x $880,000 = $2,640,000
Staff
1 x Owner
1 x Additional Financial Advisors
2 x Client Services Officers
2 x Outsourced
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