Tavistock Investments is on the brink of acquiring Standard Financial Group, the parent company of network Financial Ltd.
The investment firm has entered a ‘conditional contract’ to buy Financial and has raised £2.7m to provide “additional regulatory and working capital for the acquisition”.
The network was banned from recruiting new ARs and individual advisers for four-and-a-half months in July last year after the FCA identified “systemic weaknesses” in its systems and controls.
Tavistock will initially pay £500,000 for the business, with current Financial owner Charlie Palmer buying IFA Compliance Ltd, a subsidiary of Financial, for £52,000. The remaining £448,000 will be used to “repay outstanding inter-company loans owed by IFAC”. Palmer will leave Financial once the deal has completed.
Tavistock will then provide Financial with a further £500,000 of extra working capital and undertake to provide an additional £500,000 of funding if required.
Tavisock will also pay a deferred consideration to Financial equal to £2,000 for each adviser who remains with the group from the date of completion until 31 March 2016. The maximum possible value of this deferred consideration would be £602,000.
Speaking to Mortgage Strategy’s sister title, Money Marketing, Tavistock chief executive Brian Raven says the acquisition is a “done deal”. Asked about Financial Ltd’s previous regulatory failures, he says: “I have concerns every time I do a deal and, when you learn a company has had difficulties with the regulator, clearly you are cautious.
“We have engaged in extensive due diligence and this business has been led by a new senior management team since 2013.”