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Key Points:
- Brooks Macdonald is acquiring LIFT Financial Group for an initial £30 million, with total potential consideration of up to £45 million based on performance targets.
- The acquisition will enhance Brooks Macdonald's financial planning capabilities and increase its assets under advice to approximately £6.2 billion.
- LIFT reported revenues of £11.3 million and net assets of £0.8 million as of December 31, 2023, with the acquisition expected to be accretive to earnings in the first full year.
Brooks Macdonald Group plc (LSE:BRK), a prominent player in the financial services sector, has announced its decision to acquire 100% of the issued share capital of LIFT - 'LIFT-Financial Group Ltd and LIFT-Invest' for an initial cash consideration of £30 million. The total consideration for the acquisition could rise to £45 million, contingent upon the achievement of specified financial targets. This strategic move aims to expand Brooks Macdonald’s client reach and accelerate growth in its financial planning services. The acquisition is subject to regulatory approval and is anticipated to be finalized by the end of March 2025.
LIFT, headquartered in Greater Manchester with additional offices in London and Edinburgh, has shown robust performance in the financial advisory sector. As of 31 December 2023, the firm reported assets under advice (AuA) totaling approximately £1.6 billion, of which around £600 million are also classified as Funds Under Management (FuM). LIFT has cultivated a high-quality client base of around 1,400 individuals, families, and corporate clients, predominantly within the financial services and professional sports sectors. In addition to its wealth management services, LIFT also provides mortgage and insurance offerings.
For the year ending 31 December 2023, LIFT reported revenues of £11.3 million, an EBITDA of £2.5 million, and a profit before tax (PBT) of £0.5 million. As of the same date, the firm had net assets totaling £0.8 million. The acquisition is expected to be accretive to Brooks Macdonald's underlying earnings per share in the first full year following the completion of the deal.
This acquisition aligns seamlessly with Brooks Macdonald’s strategy to enhance its financial planning capabilities, building on the recent purchase of Lucas Fettes Financial Planning. The combined acquisitions are projected to contribute more than £16.5 million in annual revenues and increase the Group's AuA by approximately 70%, elevating its total AuA to around £6.2 billion after the planned disposal of BMI.
LIFT's integration will further bolster Brooks Macdonald’s investment management capabilities, offering strong growth prospects in the UK financial planning market. The acquisition presents an opportunity for the Group to expand its service offerings and improve client engagement across its portfolio.
Funding Structure and Future Outlook
The total consideration for the acquisition of LIFT amounts to up to £45 million, structured as follows:
- An initial cash payment of £30 million upon completion of the transaction.
- An additional cash payment of up to £10 million at the end of the first 12 months post-completion, contingent upon achieving specific client retention targets, weighted by AuA.
- A final payment of up to £5 million, to be made in a 50:50 mix of cash and Brooks Macdonald shares, also dependent on meeting EBITDA financial targets within the first year.
Brooks Macdonald is leveraging its existing cash resources to fund this acquisition, reflecting the Group’s confidence in the strategic fit and future potential of LIFT within its operational framework. This acquisition is expected to enhance Brooks Macdonald's competitive position in the financial planning landscape while delivering significant value to its shareholders.
