AFS backs out of acquisition of shy dealer group

Australian Financial Services (AFS) has withdrawn from acquisition negotiations with another dealer group it said was reluctant to share profitability information.

AFS chief executive Peter Daly said his group had withdrawn from negotiations with the unnamed dealer group, which he had previously described as significant in size, when the group failed to provide the required information for due diligence purposes.

"Sadly we've decided not to pursue that one, primarily because the dealer group in question was very, very reluctant to provide us with sufficient information from which to complete the due diligence," Daly said.

"As soon as we started requesting information that would allow us to determine profitability, they failed to respond.

"Regrettably, we've notified them that we're withdrawing as a consequence."

Daly said low profitability wouldn't necessarily have been a deal breaker - AFS prides itself on turning dealer groups around. Meanwhile, low profitability might have resulted in a better price for AFS.

The AFS chief pointed to one of his subsidiary companies, The Salisbury Group, which recorded a $40,000 loss last financial year but which Daly said had been "completely turned around".

"I think this is an environment where people are clinging to the past, and the past was simply a transaction based upon recurrent income or funds under management. One of the things that we definitely look at is the profitability of an organisation and, more importantly, where we believe we can take that organisation," Daly said.

Daly said his group remains acquisitive and is "certainly on the lookout again".

"We're very keen and from what I understand there are opportunities out there, and certainly AFS is well poised," Daly said.