Merchant Securities, which owns Aim adviser John East, is buying Belgravia-based IFA Cavendish Young.
Cavendish Young has 2,500 clients and manages £46m for them. This will take the funds managed by Merchant Securities to £135m.
Merchant is paying an initial £65,000 for Cavendish Young. The deferred consideration is based on the profitability of the business up until March 2014 and the growth in the discretionary funds under management during the same period. The total deferred consideration could be £1.3m – up to £800,000 based on profits and £500,000 based on funds under management.
Cavendish Young made a profit of £2,665 on revenues of £630,000 in the year to March 2009.
Cavendish Young will help to boost the recurring income generated by Merchant Securities.
At 7.25p a share, Merchant Securities is valued at £3.4m.
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