One of the questions we are most often asked is “is it the right time to sell my business?”. My half serious response is always that if I knew the answer to this question, I would not be doing this job. But it is an important answer, so deserves a considered response.
Individual owners of quoted equities can typically sell within minutes of taking the decision to do so, in all but the direst market conditions. Owners of private businesses are in a very different position. Decide to sell today and – in more cases than not – the process can take more than six months. Transactions discussed in this August newsletter reflect, in most cases, decisions by owners taken in perhaps Q4 2020 or Q1 2021.
We also impress on our clients that the start of any sales process is the decision to explore a possible sale; the final decision to sell is ultimately taken only when one is ready to put pen to paper and starts signing the various documents involved. To do a good deal, one has to be prepared to walk away from a deal; even right at the end. Until the documents are signed it is typically best to continue to run the business as if no sale is anticipated, thus ensuring one can walk away from a transaction right up to the last moment.
Whilst there are certainly bad times to sell a business, the right time to sell a business – based on financial considerations – is less absolute. Financial services businesses are currently attracting premium prices, but so are other assets. Equities and houses are all considerably more expensive than they were, say, five years ago, and turning up at the bank to deposit your sale proceeds at current deposit rates is not something that will excite everyone.
We continue to believe that the right time to sell your business should be a decision driven by mainly operational and personal factors. Our involvement and understanding of the buyers ensures that our clients embark on that process fully prepared, with the greatest chance of optimising the outcome in a manner that will deliver their personal objectives.
Insurance
Perhaps unsurprisingly given the summer lull, August was a relatively quiet month for Insurance sector M&A, with ten new deals recorded.
Two of the transactions in the month were by Aston Lark, which announced the acquisitions of commercial broker Plester Group in Worcestershire, and Essex Insurance Brokers in, erm, Essex. The latter has a particular specialism in the film and visual arts sector, where Aston Lark is already a prominent player. With more than a dozen UK acquisitions already announced in 2021, Aston Lark has been the busiest acquirer in the UK market in terms of number of deals announced this year, ahead of GRP, PIB and Ardonagh, albeit a number of the other consolidators have spent more on M&A in 2021 by doing larger deals.
There were also two new acquisitions by DR&P, which has acquired both Stockport-based commercial broker JJ Yates and Cumbria Insurance Brokers in Carlisle. Having also made two acquisitions in July, DR&P has had a busy summer and got off to a flying start under new private equity backer Inflexion, which invested in the business in March.
Lastly among the consolidators, Global Risk Partners – through its South West hub business Higos Insurance – announced that it had acquired Web Shaw (trading as Jacksons Insurance) in Penzance, and PIB Group announced that it has acquired Simply Insurance Services, a motor broker based in Purfleet.
In personal lines, travel provider InsureandGo was divested by Spanish insurer Mapfre and has been acquired by AllClear, the specialist travel broker backed by Synova. And in another headline grabbing deal, Right Choice Holdings announced it had agreed to acquire online SME broker Moorhouse, better known by its trading name constructaquote.com.
Finally, Talbot Jones Risk Solutions, the family-run commercial broker based in Gateshead, announced that it had acquired March Insurance Services in North West Wales, and Blythin & Brown Insurance Brokers, an independent broker in Leicestershire, underwent a management buyout (MBO).
Investment
In the asset management sector, Goldman Sachs Asset Management announced the purchase of Netherlands-based specialist ESG asset manager NN Investment Partners for £1.3bn, adding approximately $355bn in client assets. BT Pension Scheme agreed a £115m deal to sell its remaining 29.5% stake in Hermes Fund Managers Limited to US-based Federated Hermes. M&G reached a deal to acquire the Huddersfield-based financial planning group, Sandringham Financial Partners, which looks after more than £2.5bn in AUA.
More deals were agreed with IFAs as the consolidation in the sector continued. Ascot Lloyd acquired Aberdeen-based Central Investment Services, adding £761m in AUA, while Mattioli Woods acquired Richings Financial Management with £70m of AUA for £1.8m. Tenet added £100m in AUA by acquiring Leeds-based Astute Financial Advisers. Perspective Financial Group bought Wiltshire-based Avon Financial Advisers which has £42m in client assets. Wealth manager Courtiers acquired South West-based Davidsons IFA with £120m in AUA. Bristol-based Aspirations Financial Planning added £30m in AUA by acquiring Batcombe Financial Services and Clifton Asset Management completed the acquisition of Portsmouth-based financial adviser Leonard Gold.
Among the larger IFA groups, True Potential confirmed it is considering offers for the company, but denied it has put itself up for sale. It comes after rumours that the company was in discussions with several buyers, including a company linked to Bernard Arnault, the chief executive of luxury goods company LVMH. Cheltenham-based Attivo Group stated that it will consider listing in a couple of years’ time as it continues to pursue growth, having set out an ambition of reaching £5bn of assets by the end of its current financial year.
Elsewhere in the sector, Swiss-based LGT Group, which has large presence in the UK, acquired a minority stake in Berlin-based digital wealth manager LIQID, which looks after $1.7bn in AUM. Socium Group acquired a “significant controlling stake” in London-based mortgage broker Charles Cameron & Associates. Sanlam announced the winding down of its Partnerships network business and is currently working with three other networks to help firms find a new home. River and Mercantile received a number of offers from businesses looking to acquire its fiduciary division, known as Solutions. Online retail investment platform Interactive Investor is preparing for an IPO that could value the business at £2bn. Frenkel Topping acquired legal costs consultancy Bidwell Henderson Costs Consultants in a deal valued at £1.48m.
Lending
It was the typically quiet summer month in terms of the lending M&A markets.
City of London Group announced a capital raise of £11.4m through a share subscription and a raise of up to £6.9m through an open share offer, and announced it was in the process of disposing of its interest in Milton Homes: both the capital raise and the expected sale were undertaken to support the growth of its subsidiary Recognise Bank.
Following the announcement earlier in the year by Provident Financial that it intended to place its home credit business into managed run-off or to consider a disposal, the company confirmed that the managed run-off of the business was expected to be completed by 2022.
In the neo bank market: Bank North closed a £20m Series A funding round, raising new capital from investors including LHV Group, Skipton Building Society, Channel 4 Ventures and Greater Manchester Combined Authority; and Kroo announced a £17.7m Series A funding round led by Karlani Capital.
*IMAS Corporate Finance LLP has been acquired by MarshBerry.
