Listed accounting consolidator Countplus has finalised the business model for its sister company C+2 and brought the new company’s proposed listing date forward one year.
Countplus executive chairman Barry Lambert said C+2 would implement a three-pronged strategy which involved Countplus acquiring an initial 30 per cent interest in large accounting firms, paid for with cash. Approximately two years later the group would borrow to acquire a further 30 per cent stake to be held by the C+2 entity. The remaining 40 per cent would be retained by the underlying firm’s partners and staff.
Lambert said the plan was to list C+2 in 2016, a year earlier than he previously forecasted.
“There’s strong interest in this model because it’s the way of the future,” he said. “It ensures that the next generation of young people coming through can afford to buy into a large firm without having to put together a large sum of money to buy an existing partner out.”
Lambert said the C+2 model provided a solution for young professionals, who typically had high personal debt rates which inhibited their ability to buy into a practice. It also provided retiring principals with an alternative exit strategy.
Countplus member firm Hood Sweeney is expected to be the foundation firm in C+2, however, the South Australian professional services firm’s planned merger with Shearer + Elliss, which will be effective from December 20, will see Countplus’ 25 per cent interest in the firm diluted to 19.9 per cent.
Countplus has plans to boost its holding in the combined entity, which will be ranked among the top 35 largest accounting firms in Australia with 110 staff and around $25 million in revenue.
“We will probably increase our holding in Hood Sweeny to 30 per cent sometime in the next few years so they fit the model,” Lambert said.
“We haven’t formally made an offer to Hood Sweeney to go into C+2 but both sides have expressed an interest. We’re also talking to other large firms about C+2.”
The C+2 model is a deviation from the traditional CountPlus model, which focuses on small “tuck-in” acquisitions. Countplus has a network of 21 professional services practices.
Countplus firm Kidmans Partners recently merged with Melbourne-based accounting practice Taylor Partners.
