Moneygate doubles up with new model

Financial services firm Moneygate expects to more than double its annual turnover to £25m in the next 12 months after developing a business model that it says will feed its fervent hunger for acquisitions more quickly.

The South Tyneside headquartered firm, which also has bases in London, Edinburgh and Sheffield, has grown rapidly through acquisition since its inception in 2007 and to date has advised on client assets worth over £1.75bn.

In the last year the firm, which currently employs 125 financial advisers, has seen its turnover increase from £5m to £12m.

In the year ahead this is expected to grow to £25m, with much of its confidence stemming from a model it has developed that makes it easier and faster for it to acquire multiple financial advisory firms.

Working with Newcastle law firm Muckle LLP it has created what it calls a Deferred Buyout Model (DBO) which it says reverses the traditional acquisition process.

Moneygate chief executive said: “We have created and refined a model which is different to the usual method of acquiring businesses in our market. We effectively absorb the target company as a franchise first and then layer our business processes over the top.

“At the same time we agree to purchase the business, provided certain conditions are met, within a set timescale for a fixed valuation multiple which is typically higher than our competitors will pay today.

“This means that we can work together with the target company for a number of years, building profitability and making the business more efficient, prior to completing the acquisition. We do the difficult part – the integration phase – first and that is why we are happy to pay a higher price for a fully embedded business.”

As Moneygate continues on the acquisition trail, the firm expects to grow its 125-strong team to 400 by 2015/16. The company also says it is currently considering an AIM floatation.