CountPlus CEO Matthew Rowe will present the case for the company’s $2.5 million acquisition of CBA licensee Count Financial to shareholders on August 6 after ASX-approved independent assessor Lonergan Edwards and Associates described the proposal as “fair and reasonable” and “prima facie… a good strategic fit for CountPlus”.

With the green light from Lonergans, only shareholder approval remains for the ASX to rubber stamp the deal.

Lonergans, which valued the licensee at between $9 million and $20 million, was not the only advocate of the acquisition. Wilson’s Equity Research called the purchase a “bargain” and valued the licensee at $40 million, while researcher Under the Radar promoted CountPlus shares to a speculative buy – even after the share price spike.

“Count Financial is actually a great business, it just needs to be run differently with a different owner and a recalibration of some cultural settings,” Rowe said to Professional Planner. He added that he’s not taking the support of shareholders for granted. “I would never assume it’s a fait accompli because anything can happen in a listed environment.”

CountPlus shares have doubled from 44c before the announcement in June to around 90c today.

In good faith

Rowe acknowledged the deal has risks.

According to an Extraordinary General Meeting notice lodged by CountPlus over the weekend, Count Financial incurred an operating loss of $6.1 million in 2018. More broadly, the industry is undergoing vast reform – including the excise of grandfathered commissions on January 2021 – which the EGM notice estimates will drain 60 per cent of revenue from Count Financial’s books.

There is also a chance the $200 million indemnity policy set aside by the Commonwealth Bank for remediation costs falls short. CBA is not liable for the excess, but there is a ‘good faith’ agreement in place that Rowe is comfortable with.

“I can’t see them walking away from this,” he said. “It’s just not them, and it wouldn’t be in their best interests to do so.”

All up there are 15 risks identified in the EGM notice by CountPlus, but Rowe said he remained unfazed. He spoke of the “doom and gloom” pervading the industry and acknowledges that the models of the past “haven’t worked, don’t work now and won’t work in the future”.

The trick is to focus less on the industry and more on the client, he said.

“The supply side is getting knocked around a bit but the consumer doesn’t care about any of that,” he stated. “The consumer just wants to sit in front of someone they trust, who gives them peace of mind and helps them map out their goals.”

Advisers should try to filter out the noise, Rowe said, and focus on what they can control.

“The Chinese saying for ‘crisis’ has two characters,” he added. “One is danger, and the other is opportunity.”

Make the tough calls

Rowe has taken confidence from licensees like Centrepoint, which Lonergans used as a benchmark to show how revenue streams are affected when legacy revenue is switched off and a fee-for-service pricing structure is implemented – something Rowe said he intended to do.

Centrepoint CEO Angus Benbow spoke at the Professional Planner License summit in Katoomba this year about the challenges – and rewards – of switching to an upfront remuneration model.

“All credit to Angus, he’s gone early and shifted their model,” Rowe said. “You can’t be a leader without followers, and a proof point for him was that they had 88 per cent of advisers sign up to their new model.”

Leadership is a recurring theme for Rowe, who said his main job is to set the cultural tone and make tough calls quickly. “Sometimes the mistake a leader makes is to let things just drift along and hope that they recalibrate and get back on track.”

Rowe also has faith in CountPlus’ ability to roll out its ‘owner, driver, partner’ model – where it takes equity stakes in advice businesses and lends its expertise and capital to help the business grow – to Count Financial firms. But he won’t be forcing it on them. “That’s a separate proposition,” he said.

Bloody and dirty

Rowe has his detractors, some who have voiced their scepticism at the Count Financial deal on platforms like LinkedIn.

“I don’t want to be one of the guys in the grandstands throwing stones,” he continued. “I’m out on the field of play getting bloody and dirty with the other guys. I’m backing those guys. I believe in financial advice and I’m doubling down on it.”

The CountPlus board is “quietly and positively disposed” towards the shareholder vote, according to Rowe. The firm is already expanding its team in anticipation, but Rowe won’t be counting his chickens.

“You can ask me again about 1:30 on the sixth of August after the last shareholder vote goes through,” he said. “Once that’s done, we’ll look to take ownership… the first of October is the new world for us.

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning.
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