Sale of an IFA

David Pelster, CEO

About Chancery Financial Planning

Chancery Financial Planning provides financial planning advice to individuals and families who trust Chancery as their personal financial adviser. Chancery also work with many businesses on their pension and employee benefits provision as well as helping individual business owners.

Chancery was one of the first firms to adopt the New Model Adviser fees based approach to charging rather than the previous commission based model. Other firms only followed suit when obliged to do so under the Retail Distribution Review in 2012.

Forefront of the IFA profession

This underlined the Chancery position as being at the forefront of the IFA profession and demonstrated the Chancery commitment to openness and transparency.

I first came across Gannons in 2012 when they were actually on the other side of the table from me – so I saw just how hard they fought for their client! They were representing my retiring business partner at the time and got him a good deal so I decided to engage with Gannons once he had retired.

The Brief

Over the years, Gannons has looked after much of the legal work for the business as it grew and took on new partners. However my latest instruction to Gannons was to act on the sale and purchase of a majority stake in the business to Socium Group.

What challenges (if any) did you face?

Working through the tax implications on the sale when we were to remain in the business for a while post Completion was complicated. The nature of a sale of an IFA business is such that the Buyer wanted a split exchange and completion so that although all deal terms were agreed the completion wouldn’t occur until after FCA consent to a change of control had been given. It is quite unusual for a share sale to have a split exchange and completion. The same issues apply for companies as they do for LLPs partnerships.

A split exchange and completion can be problematic for a seller in that they are locked into a contract to sell at a time in the future but for the same price offered today. The seller may end up with a higher risk of claims if the buyer has a long list of conditions and the seller cannot comply with those. This can put tension on the sale, particularly where the split-exchange agreement is drafted to allow the buyer an ‘easy way out’ giving them wide powers to choose whether to complete or pull out based on ambiguous conditions.

At this point, the seller has been locked into a contract for weeks or even months. If the deal does not reach a completion the buyer can face re-negotiation of the price often with a new buyer.

I needed careful negotiation and planning in relation to the dates for completion and certainty around the completion conditions to ensure that I was not locked into obligations and a deal that I could not comply with. Gannons also worked around the clock to ensure that all of Chancery’s (and my) ancillary contracts and documentation were in agreed form prior to exchange so that there was no second round of negotiation between exchange and completion, the ancillary contracts such as my service agreement going forward, included. After exchange, the sale was completed without a hitch.

What would you say about working with Gannons?

Gannons were responsive, efficient and supportive. I was pleased to have them on my side in negotiations. They, took the time to really understand our needs and knew when to be tactical, when to push and when to let go. They also have in-depth knowledge of the various tax matters and IFA compliance issues at play in this transaction, providing a full corporate service.

The team included Helen Curtis – partner and Kim Whitaker – associate solicitor.

Helen Curtis

02074381060 | helen.curtis@gannons.co.uk

Helen is a partner and heads up the corporate team, advising start-ups, SME companies, partnerships, entrepreneurs, investors and shareholders. Dual-qualified in the UK and USA and a qualified solicitor since 1998 you couldn't ask for more experience.

Let us take it from here

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