A day after the merger between DKN and Lonsdale Financial Group (Lonsdale) became official Phil Butterworth has confirmed he is in talks with a number of financial planning firms on Australia’s east coast.
“There’s a really strong pipeline of new opportunities now that the deal is done. There are a number of firms that we’re talking to about joining the group. So there’s a fantastic momentum at the moment,” DKN chief Butterworth told InvestorDaily.
He said the level of involvement DKN will have with the prospective groups ranges from helping them secure their own licence, broking deals between practices and the Lonsdale network as well as aiding accounting firms with succession issues.
“The opportunities have been there but now we’ve got the quality team and resources in place to actually make it happen. So we’re expecting a fair degree of activity from here on,” Butterworth said.
“And also the existing practices have got some equity in the overall company so it’s a nice alignment strategy to ensure that there’s mutual interest. It’s all very good.”
While Butterworth is excited by prospective new deals, he is quick to point out he is not interested in chasing member firm numbers.
“We’re not after numbers we’re after quality practices. So we’re not actually just chasing numbers,” he said.
“In regards to having equity in firms, our initial target is to have 15 equity positions. So each of those underlying companies that we have equity in we expect them to make quite a number of other transactions, like buying accounting or other financial planning businesses.”
DKN and Lonsdale, including Wrap Account, finalised their merger yesterday.
The combined transaction is worth approximately $114 million, and leaves DKN a market capitalisation of about $219 million.
The combined group is expected to have a network of more than 300 planning practices. Its projected funds under advice for June 2008 is $9 billion in June 2008, including approximately $6.5 billion of BT Wrap. If predictions are correct this figure will make DKN the largest distributor of BT Wrap outside of Westpac.
The acquisitions are expected to result in a combined group net profit after tax for the half year to June 2008 of $6.3 million.
