Smith opts for full sale of AM
Independent financial planners will share in the proceeds of the sale ofAM Corporationafter the group’s founder, David Smith, confirmed today he would sell his entire majority stake in the group.
AM revealed the plans to its major supporters in the financial planning community last week following a strategic review of the group by Gresham Partners.
As well as the full sale of the group, the review considered other ownership possibilities for AM, including alliances and partnerships with outside parties.
However Smith, who owns 96 per cent of AM, rejected all other options after conceding he would find it unworkable to have to share ownership of the group.
"It was clear that there are organisations who, through an alliance or partnership, could bring a lot to enhance the AM vision. However, it was also clear that, after 27 years of full control it was difficult to envisage me sharing control with them,” Smith says.
"Having made the decision that it is in the best interests of the business and our clients to bring in new equity, the Gresham review demonstrated to me that a full sale is the only option.”
The portion of the sale proceeds to be allocated by AM to individual financial planners is still to be determined.
However AM group general manager Graham Davison says the amount is likely to depend on the level of business individual planners write for AM over the next 12 months, as well as the period of time they have been associated with the group.
In an interview withMoney Managementtoday, Davison said the sale would inject much needed capital into AM, whose growth had stalled over the past 18 months.
“We grew very quickly up until early 2001, and then it just plateaued. Part of that has been a systems issue and part of that has been a brand issue,” he says.
Davison says AM has already been contacted by a number of parties expressing interest in the group.
He says AM is preparing to draw up a shortlist of would-be buyers, although the list is unlikely to include any of the major local banks.
“David [Smith] has expressed that he would like a like-minded company to take us on. So that probably means not one of the major banks,” he says.
The uncertainty surrounding AM’s future ownership appears to have created some concern about the retention of staff at the group.
The group said today it would need to implement a staff retention strategy throughout the sale process in order to keep the existing AM team together.
“[AM managing director Trevor Howell] has gone on the record as saying that he would like to keep everyone. But it will depend on who ends up buying us,” Davison says.
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