News

2
Mar

Lancashire IFA adds £160m in assets to consolidator Fairstone

The Fairstone group, the consolidator behind national IFA Fairstone Financial Management, has added £160m in assets under advice through their tried and tested ‘downstream buyout model’, by purchasing Lancashire-based IFA McParland & Partners.

The ‘downstream buyout model’ features Fairstone taking a minority stake, often around 10% of the IFA business and then integrates the firm over a number of years. The deal can take a number of years to go through but decreases the risk to the consolidator. Lee Hartley, CEO of the Fairstone IFA, has branded the model as being “the single best decision we have ever made” in its introduction in terms of long term strategy.

Fairstone became partners with McParland & Partners in July 2014. The bought firm is based in Nelson, Lancashire, with offices operating in Manchester and Sheffield alongside.

The agreement adds £160m of assets as well as 2,000 clients to add to Fairstone’s books; eight advisers fifteen support staff at McParland have joined Fairstone.

Fairstone IFA added the downstream buyout model would ensure clients’ smooth transition for McParland’s clients.

Fairstone’s buyout model takes between 2-4 years on average to see completion, dependent upon the partially bought firm’s financial performance and how long it needs to grow whilst incorporating Fairstone’s ethics and operational mantra.

Following this, Fairstone’s formula for valuation adds recurring income and post-tax profits, takes the average over recent years, then multiplies that by six, or seven dependent upon whether the firm is labeled as chartered.

CEO Lee Hartley detailed last year that he expected to pay in excess of £10m for up to five of the firms due to finish the ‘downstream’ program by the end of 2016.

Fairstone Financial Management, an independent firm, offers in-house, discretionary model or tailored portfolios through its wealth management arm under the Marketstar brand. For clients with needs these services cannot accommodate, it uses eight external discretionary fund managers.

Sean McParland, the principal at McParland and Partners, said: ‘The acquisition by Fairstone means that our clients can look forward to a continuation of the high quality of advice and service they have enjoyed. The strength of Fairstone’s technology input will provide significant opportunities to continue to grow the business well into the future and to leverage a national brand of chartered financial advisers.’

If you would like to know more about Fairstone and other IFAs, feel free to contact Louise at 0117 9926 335 or email louise.jeffreys@gunnerandco.com .