Succession buys major stake in member firm ahead of 'capital event'

Succession Advisory Services has acquired a major stake in one of Scotland’s largest IFA businesses as it seeks to establish four ‘hub’ companies across the UK.

The financial services consolidator has acquired a 39% stake in member firm Campbell Dallas Financial Services (CDFS), a fee-based IFA with more than £200m funds under management and offices in Aberdeen, Edinburgh and Glasgow.

Succession CEO Simon Chamberlain (pictured) said the deal valued the company at close to £5m and includes a promise to invest in the business to support its acquisition of other Succession members as well as its own targets.

Chamberlain hopes CDFS, which has undergone a transition from transactional IFA to service-led financial planning business since joining Succession in 2009, will become the firm's first 'hub' company, attracting smaller IFAs to join and adopt similar business processes.

He said he has plans for hubs in the south, east and west of England, which he hopes between them will acquire the remainder of Succession's member businesses in a "capital event" pencilled in for June 2013.

"We have worked with CDFS for more than 15 months and are confident that the traditional risks associated with buying an IFA business are now significantly diminished by our processes," Chamberlain said.

"The revenues are transparent, the clients have been re-engaged in such a way that the revenue streams produced are highly sustainable and that sustainability greatly enhances the capital value of the business."

CDFS chairman Jim Campbell, who founded Campbell Dallas Chartered Accountants, said he hoped the deal would allow the company to expand into England.

"This deal makes us a national company," he said. "We will be climbing Hadrian's Wall or, as I would put it, smashing through it. We're hoping it will quadruple the value of our business and help us on our way to be a 1% fee-charging IFA."

Launched in 2009, Succession invites advisory businesses to adopt its fee-based "RDR-ready" processes, including its ‘investment matrix' designed to maximise firms' renewal income and its in-house platform.

It acquires a 15% stake in each company, with the aim of consolidating them on 1 June 2013, in what Chamberlain said would be the "biggest capital event the industry has seen".

Members will be purchased at a multiple of the value of recurring income generated from assets on Succession's platform, added to a multiple of assets not on the platform. The capital event also offers principals an exit strategy.

So far, 35 firms with some £5bn in assets under influence have signed up, but Chamberlain aims to attract a further 50 businesses.