Perth-based financial planning business Sentry Group says it is in talks to acquire several planning businesses as it looks to continue to significantly build scale through purchases and organic growth in the next three years.
Sentry’s executive chairman, Murray Hills, says his company is at various stages of discussions to buy a number of planning practices in all mainland states. The acquisition targets have a total of around 120 practices and 180 planners.
Sentry has an organic growth target of 33 per cent in the next three years, but acquisitions would deliver scale and flow-on synergy benefits.
“We have found combining organic growth and regular acquisitions has enabled us to always maintain industry-leading support and services for our practices at all times, whilst still making a reasonable return on equity,” Hills says.
Sentry currently has 165 practices with 239 advisers, which ranks it among the top three non-aligned businesses in terms of adviser numbers.
The group has a track record of acquisitions. It absorbed Australian Finance Group in 2009, which became Sentry Financial Planning. It bought Epic Adviser Solutions in 2007, which now trades as Sentry Wealth Management.
Sentry is also bedding down its acquisition of WealthSure Group from last year.
Hills says Sentry has retained and inducted 80 per cent of the WealthSure practices, but it released some that did not meet Sentry’s compliance, cultural or commercial standards.
“Our FUA has exceeded $5 billion and our financial results are slightly ahead of the pre-acquisition forecasts, so we are very happy with the results in the first year,” Hills says.
Heading for the east coast
In the new round of purchases, Sentry will look to Australia’s east coast.
“We have the largest market share of non-aligned practices in WA so we are targeting acquisitions on the east coast where we see the greatest opportunity for more scale in the near term,” Hills says.
He says that a number of groups on the east coast have seen organic growth stall because of the proliferation of small and mid-size competitors in the space.
“We present them with the opportunity to sell or merge with a larger, better-resourced group in the non-aligned space,” he says.
Sentry’s mergers and acquisitions division has been seeing more activity in client books for sale in the past four months, Hills says, but he did not comment on valuations.
“There is so much noise around pricing multiples and methods which in the end can be counterproductive to a sale happening, as most of the numbers thrown around never happen in the real sale,” he says.
“There is no common number. The price always comes down to common sense and what the two parties, both with honest intent, want [in order to] close the deal.”
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Helping advisers’ revenue sources
The acquisition news comes as Sentry releases a range of business services to help advisers diversify and increase revenue sources, build brand recognition, and improve efficiencies within their practices.
Sentry will integrate its Sentrum SMSF administration business, SPS direct investment property consulting service, Compass funds administration business, and FPI’s range of model portfolios which are designed exclusively for Sentry advisers.
Sentry has also launched a new corporate image and social media strategy. Hills says the group wanted to create a new external presence that resonated with both its advisory network and their client base.
