Sesame customers and members should experience stability and continuity over the coming years thanks to today's deal between the management and Misys, says the firm's chief executive Patrick Gale.
Following the initial stockmarket announcement this morning, Gale says there will be no change to either the company’s operations or the management team which has now been together for four years.
(See earlier story for more information)
But what this deal should do is reassure members the firm has a future, he suggests.
“It signals we’re optimistic about the future of financial advice in the UK otherwise we wouldn’t invest in the business and gives [advisers] a strong sense of stability and continuity,” says Gale.
“The management has been together for four years, so the members know who we are, and we’ll continue to deliver to them going forward. This continuity and stability is not necessarily something other advisers can say they have. But we’ll have a little more freedom and autonomy to grow the business and to deliver more value to our customers,” he adds.
In order to pay for the new investment into Sesame, Gale explains this is “essentially a vendor financed deal” which means no money will actually change hands but Misys is technically signing over a 60% share holding to Sesame Management - with Misys still supporting the development of the company over coming years – as Sesame will repay the capital sum over the coming years.
A 60% share gives the management complete control of the firm and if the company then meets its targets, Misys will then rebate up to £90m of that capital to Sesame Management as the priority is to stabilise Sesame’s capital base and pay it back over time through a “commitment to drive profits”.
“What this means is there is no horrendous loan plan with horrendous repayments, and we have confidence we will repay it, continues Gale.
“What we are looking to do at this stage is build the capital value of the business and Misys is very keen to retain some stand in this and share in the upside.”
Have Your Say: Ash Pankhania, of Watermead Financial Ltd in Leicester, says:
My primary concern is that the Sesame’s charges do not increase as the result of MBO otherwise - as the poll suggests - there will be migration from the network!
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Julie Henderson on 020 7034 2679 or email [email protected].IFAonline
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