Despite a surprise bid for Diverger, Count CEO Hugh Humphrey is clear that their position is they have a “great deal” with Diverger which is slated to be completed in February.
A rival bid to acquire Diverger was confirmed on the ASX on Monday morning after a media report in the Australian Financial Review announced the offer from COG Financial Services.
The Sydney-based COG has until now kept a low profile in the industry and did not respond to a request for comment.
Count’s acquisition plans were announced in September – which unlike the non-binding COG offer – had been coordinated by both parties.
“[Count’s offer] been unanimously supported by all of the Diverger board directors including the HUB24 appointed director,” Humphrey tells Professional Planner.
“HUB is the major shareholder of Diverger and supported the proposal and declared they’ll vote in favour of the deal as well and all of that is in absence of a superior proposal as well and that’s the case as we stand today.
“In any event, we have a matching right in our bid anyway so there’s obviously opportunities there.”
For Count’s deal, Humphrey says the scheme arrangement documents are nearing completion which are in final review soon to be delivered to ASIC within the week.
Additionally, the independent expert report appointed by Diverger to review the deal is also nearing completion.
The transaction has a planned completion date for 27 February 2024. “We’re right in the thick of it, getting it done,” Humphrey says.
Humphrey is adamant that Count is the superior deal due to the backing of the Diverger board and key investors off the back of months of preparation and coordination between the two companies.
“Our proposal doesn’t depend on a whole lot of caveats including things like capital raises or big questions around how things get funded,” Humphrey says.
“We’ve done the work, we’ve been in there for four months doing really detailed analysis. You’ve got to really know what you’re doing to assess and manage the risk around those components and we’ve done all that work.”
Already connecting
The work done over the proceeding months has meant Count has already begun building relationships in Diverger – Humphrey was invited to attend the Paragem annual conference in Fiji in October and will attend the GPS Wealth conference this month in Malaysia.
“The feedback was positive and the advisers know we won’t disturb their business or their momentum,” Humphrey says.
“They’re excited about the capability we’ve got, the services we’re going to offer – they’re really interested in our equity offer – a number of firms have already started conversations with me around that.”
Humphrey believes the Diverger network sees the value of scale and how that benefits pricing on technology, as well as pricing for clients on platforms and investment products.
“For a transaction like this to succeed, you’ve got to have the boards lined up, the management teams lined up and supportive and in agreement, and you’ve got to have the shareholders supportive,” Humphrey says.
“That doesn’t come easy and it’s very difficult to replicate that. If other people are thinking about doing a transaction like that, to achieve that degree of alignment across all those key stakeholder groups, it’s pretty tough and you can see the Count transaction is unique in that regard.”
Equity stakes
As noted by Humphrey and Jacobsen when the deal was announced, the acquisition allowed Count to leverage Diverger’s services while Diverger would benefit from Count’s M&A expertise.
“What’s great about this proposal is that taking an equity stake is relatively new for Diverger whereas for 43 years Count has had experience in investing in accounting and financial planning businesses,” Humphrey says.
“Diverger doesn’t employ an M&A resource, we have a team of three full time… because of the volume of transactions we do – we do about one every five weeks.”
Humphrey noted the work of head of operations for core firms, Michael Gay, who leads that M&A capability.
“From the capability of doing the M&A and [to] the capability of being able to fund the M&A, [to] the capability of being able to grow and support the business on an ongoing basis, we bring those real key strengths to the table,” Humphrey says.
