DKN invests in growth
Financial services provider DKN Financial Group has confirmed its fifth equity partnership since the strategy launched in May 2005 with financial planning company MW Planning.
In line with its past deals, DKN has acquired a 25 per cent minority stake in MW Planning for $2 million, with final payment of up to $975,000 deferred until 2009, subject to performance benchmarks.
MW Planning is the fifth independent financial planning practice to partner with DKN since the strategy was initiated over 18 months ago. The other firms include three Adelaide-based practices, Goldsborough Financial Services, Thorton Group and Tulare, and Queensland-based firm Quill Group.
DKN chief executive officer Phil Butterworth said this was only the beginning, with the group ultimately aiming to have minority investments in 10 to 15 financial planning practices around Australia at a rate of two partnerships per year.
He added that the scheme came about from a realisation the industry was undergoing a succession dilemma and needed to grow scale.
“DKN has developed an equity partnership solution for non-aligned financial planning practices to achieve scale through acquisition without having to become part of an institutional group.
“We can best describe these firms as hubs or bases for greater growth. So even though we may only be taking an equity stake in 10-15 firms, we expect our partners to acquire other firms and create further acquisitions in their own right.”
Butterworth said the deal would see MW Planning benefit by having access to capital, short and long-term finance, DKN’s expertise in due diligence business valuations and its financial products and services.
“DKN and its shareholders benefit through ongoing profit contribution from the minority investments, as well as through support for DKN’s products and services,” said Butterworth.
In addition to this latest equity partnership DKN is currently in discussions with Zurich Financial Services Australia with a view to acquiring the Lonsdale Financial Group and Wrap Account Limited.
As part of these ongoing talks Zurich is looking to strengthen the distribution of its investments and insurance products through the use of DKN’s advisory network.
Recommended for you
Proposed legislative changes to safe harbour duty could result in advisers having reduced professional indemnity costs, a joint submission by seven major licensees said.
With 66 per cent of newly established advice licensees being sole advisers, what are the risks and legal ramifications to consider when taking the plunge into self-licensing?
Despite its popularity, only 1 per cent of financial advisers say they have often discussed cryptocurrency with clients, CoreData said, fuelled by concerns of heavy legal expenses if the product goes wrong.
AFCA and the CSLR have signed a memorandum of understanding as to how they will support an efficient financial services sector via the scheme.