Merchant Securities plc (AIM:MERC), have announced the acquisition of privately owned Cavendish Young Ltd. The deal consists of an initial payment of £65,000 with agreed deferred payments of up to £1.3m subject to the group’s performance between now and 2014. Specifically the terms relate to the future profitability of Cavendish Young and the amount of funds which come under the discretionary management of the Group.
Merchant Securities plc specialise in private client investment management, institutional research and trading, with an additional corporate finance and corporate broking division.
Cavendish Young was formed in 1999 and has grown a base of £46 million in managed funds for high net worth individuals. The Company has a total client base of 2500 private clients. In the year ended 31 March, Cavendish Young made a profit before taxation of £2,665 on turnover of £630,342 and had net assets of £229,018.
For Merchant Securities the acquisition represents a substantial increase in funds under management, with the combined funds under Group management increasing to over £135 million with the potential to increase discretionary funds under Group management to over £50 million, before any future organic growth.
In his statement , Merchant Securities CEO Patrick Claridge emphasised the growth of the private client business as a strategic aim to develop long term recurring income, he also stated that Merchant Securities remain open to the possibilities of further acquisitions as they develop their business;
“We will continue to seek appropriate ways of expanding the Group, with an emphasis on increasing long term recurring income and delivering a high-quality service to our entire client base.”