A private equity firm plans to buy Harwood Wealth Management for £91m.
Harwood Wealth Management is in the business advisory business.
On Monday, the wealth manager announced Hurst Point Topco Ltd, backed by a private equity parent Carlyle had agreed on terms to buy Harwood.
The PE firm values Harwood at 16.3 times its unaudited adjusted earnings. The wealth manager’s directors have already committed to back the sale, with shares representing 66.8% of the company.
In the announcement, the directors said they intended to recommend the remaining Harwood shareholders vote in favor of the deal unanimously.
Harwood said the acquisition presented an attractive opportunity for shareholders to sell their shares, given the challenging market environment for organic growth.
The upward pressure in costs, the need for further funding to support ongoing acquisitions, and investment in the cost base support the acquisition.
Peter Mann- Howard’s non-executive chairman, said, “The Harwood management team has demonstrated a strong execution track record.
They have undertaken multiple acquisitions, grown profits, and achieved a significant increase in the share price since their initial public offering in March 2016 at 81p.
“Looking ahead, the board believes that Carlyle and Hurst Point will be excellent partners to Harwood, providing the capital backing, strategic support, and additional resources and investment needed for the business to continue to grow.”
“Looking ahead, the board believes that Carlyle and Hurst Point will be excellent partners to Harwood, providing the capital backing, strategic support, and additional resources and investment needed for the business to continue to grow,” he added.
Mr. Mann said he believed the acquisition was in the best interests of all stakeholders at the company, which he said remained committed to maintaining the very highest quality of service to our clients and our partners.
He added: “The Harwood board, therefore, unanimously recommends that shareholders vote in favor of the resolutions relating to the acquisition.“
If the sale proceeds, Harwood said it would not pay a dividend to shareholders for the financial year ended October 31, 2019.
In June, Harwood reported a 74% jump in pre-tax profits for the first half of the financial year, following a £4.3m acquisition spree and despite “turbulent” equity markets.
Ian Gladman, executive chairman of Bidco, said he “greatly admired” the achievements of Harwood since it launched to market 18 years ago.
Compass Wealth Management and Wellian Investment Solutions merged to form Harwood.
The company, which has around £5bn of assets under management, is listed on the Alternative Investment Market.