Acquisition of Doherty Pension & Investment

RNS Number : 8293W
Mattioli Woods PLC
20 April 2023
 

 

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20 April 2023




Mattioli Woods plc

 

("Mattioli Woods", "the Company" or "the Group")

 

Acquisition of Doherty Pension & Investment Consultancy Limited

 

Mattioli Woods plc (AIM: MTW.L), the specialist wealth and asset management business, is pleased to announce the acquisition of 100% of the share capital of Doherty Pension & Investment Consultancy Limited ("Doherty's") from its shareholders ("the Sellers") for a total consideration of up to £15.048 million on a cash-free, debt-free basis ("the Acquisition"). 

 

Highlights

 

· Doherty's is one of the largest financial planning and wealth management businesses in Northern Ireland, with specialist pension expertise and a discretionary investment management offering; 

· Total consideration of up to £15.048 million comprising upfront consideration of £6.78 million in cash and £2.0 million in new ordinary shares in Mattioli Woods (" Consideration Shares"), plus deferred consideration of £1.5 million and c ontingent consideration of up to £4.768 million payable in cash in the two years following completion, dependant on Doherty's meeting and outperforming forecast earnings;

· Compelling rationale, as the Acquisition, inter alia, is a high quality opportunity that extends and scales the Group's existing operations in Northern Ireland, adds investment expertise to the Group's existing discretionary management proposition and adds experienced advisers to the Group's consultancy team; and

· The Acquisition is expected to be earnings enhancing in the first full year of ownership. 

 

Consideration

 

The total consideration of up to £15.048 million comprises:

 

· An initial consideration of £8.78 million (subject to adjustment for the value of net assets acquired) comprising £6.78 million in cash plus £2.0 million in Consideration Shares, equating to 325,998 shares;

· Deferred consideration of £1.50 million, payable in cash split in equal amounts between the first and second anniversaries of completion; and

· Contingent consideration of up to £4.768 million, payable in cash split in equal amounts between the first and second anniversaries of completion, subject to certain financial targets based on forecast earnings before interest, tax, depreciation and amortisation ("EBITDA") generated during that period. 

 

In addition, contingent employee remuneration of up to £0.23 million is payable subject to the satisfaction of certain performance conditions in the two years following completion. 

 

Transaction overview

 

· Founded in 1985, Doherty is an established financial planning and wealth management business with specialist pension expertise and a discretionary investment management offering; 

· Doherty's currently advises approximately 1,320 private clients, including specialist pension advice on SSASs, with combined assets under advice and administration of over £635 million;

· Doherty's enjoys a strong regional presence in Belfast.  The business employs 28 staff and Doherty's experienced management team will be retained by Mattioli Woods following the Acquisition; 

· The Acquisition has a compelling strategic rationale:

In line with the Group's strategy to explore high quality acquisition opportunities, alongside our continuing focus on organic growth;

Potential revenue synergies through offering Doherty's clients access to Mattioli Woods' bespoke investment products (including discretionary portfolio management), specialist SIPP pension administration, flexible employee benefits platform and alternative investment strategies;

Adds scale to the Group's existing operations in Northern Ireland;

Adds six advisers to the Group's consultancy team; and

The migration of the SSAS portfolio onto Mattioli Woods' proprietary pension administration platform offers potential operational efficiencies. 

· In the year ended 31 December 2021, Doherty's generated revenues of £2.92 million with a profit on ordinary activities before taxation of £1.45 million.  At 31 December 2021 Doherty's gross assets were £7.98 million and net assets were £7.46 million, including £5.16 million of cash and £2.24 million of listed investments.  

· The Acquisition is expected to be earnings enhancing in the first full year of ownership. 

 

Payment of the initial cash consideration, deal costs and estimated net asset completion price adjustment has resulted in a net cash outflow at completion of £5.84 million (net of estimated cash acquired). 

 

Admission of Consideration Shares

 

To satisfy the £2.0 million of share consideration, 325,998 Consideration Shares have been issued at a price of 613.5 pence per share.  Application has been made to AIM for the admission of the Consideration Shares to trading ("Admission").  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 25 April. 

 

Following the issue of the Consideration Shares, the total number of ordinary shares of 1p each ("the Ordinary Shares") in the Company with voting rights will be 51,633,836.  Mattioli Woods does not hold any Ordinary Shares in Treasury.  The figure of 51,633,836 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, Michael Wright, Group Managing Director of Mattioli Woods, said:

 

"It is very rare that such a great opportunity to bring one of the largest financial planning businesses in Northern Ireland into the Mattioli Woods Group presents itself.  In over 30 years of operations, Doherty's has built a solid and respected reputation, with integrity and professionalism at the heart of its client service.  It was clear from our initial discussions that Doherty's is a great fit culturally and strategically, including a focus on long-term client relationships, serving a similar client base to our existing business This acquisition is an important step forward for Mattioli Woods, strengthening our position as the only SSAS and SIPP operator based in Northern Ireland. 

 

"We are delighted to welcome Terry, Alan, John and their team into the Group.  There are many complementary elements between our businesses enhancing our specialist pension, discretionary portfolio management and financial planning propositions.  We believe the range of products and services that Mattioli Woods has to offer can support the excellent outcomes from which Doherty's clients already benefit." 

 

Terry Lappin, Managing Director of Doherty's, added:

 

"We are delighted to be joining the Mattioli Woods Group as the synergy between our companies was obvious from our very first discussion.  This can only improve our client offering and we are looking forward with enthusiasm to what can be achieved". 

 

- Ends -

 

 

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018. 

 

For further information please contact:

Mattioli Woods plc

 

Ian Mattioli MBE, Chief Executive Officer

 

Ravi Tara, Chief Financial Officer  

Tel: +44 (0) 116 240 8700

Michael Wright, Group Managing Director

www.mattioliwoods.com

 

Canaccord Genuity Limited (Nominated Advisor and Joint Broker)

 

Emma Gabriel

Tel: +44 (0) 20 7523 8000

Tom Diehl

www.canaccordgenuity.com

 

Singer Capital Markets (Joint Broker)

 

Justin McKeegan


Tom Salvesen

Tel: +44 (0) 20 7496 3000

Alaina Wong

www.singercm.com

 

Media enquiries:

Camarco


Julia Tilley

Tel: +44 (0) 20 3757 4998


 

 

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