Sequoia seeks $3.5m damages following Informed Investor acquisition

Sequoia court licensees acquisition

9 February 2024
| By Laura Dew |
image
image
expand image

Sequoia Financial Group has commenced proceedings in the Supreme Court of Victoria against Tim McGowen in relation to its acquisition of Informed Investor.

In April 2022, Sequoia completed the acquisition of three interrelated businesses – digital content platform Informed Investor, financial news website ShareCafe and Corporate Connect Research. 

The firm said at the time the acquisition “increases the scale of our direct division and specifically enhances aspects of our media, research, adviser support and technology platforms”.

In an ASX statement this week, Sequoia announced it has commenced proceedings in the Supreme Court of Victoria against Tim McGowen in relation to its acquisition of Informed Investor from McGowen and others, pursuant to a share purchase deed dated 29 March 2022. 

“Sequoia alleges that Mr McGowen has breached various warranties and provisions of the Share Purchase Deed and is seeking damages in the order of $3,500,000,” the firm said. 

According to McGowen’s LinkedIn profile, he is the managing director of Informed Investor, managing partner at Corporate Connect and managing director of ShareCafe. Back in 2022, Sequoia said McGowen would join the firm as the head of its Direct Division.

It was hoped the acquisitions would provide increased delivery of premium information and finance news to Sequoia’s client base, and assist in developing a digital and educational content platform for fund managers, ASX-listed companies and the financial services industry.

In a business update in January 2023, the firm acknowledged the integration of the three companies had taken “longer than anticipated” and that it was “causing short-term pain to its bottom line”. The delays had caused the Direct Division to fall short of the EBITDA budget by $500,000, it said.

However, Sequoia said in its FY202223 result in August that the division has since been “restructured to capture service efficiencies and new customers”.

“Whilst the Sequoia Direct Investment revenue increased by 16 per cent during FY2023, the divisional operating loss of $0.2 million was a significant budget miss. 

“The underperformance of this division against budget was attributable to acquisitions made failing to meet our expectations. The division has been restructured and we have reset a plan for FY2024 that is in line with past expectations while still meeting our internal target of achieving at least a 15 per cent return on equity.”

Sequoia said it will update the market on any further court proceedings.

Read more about:

AUTHOR

Add new comment

The content of this field is kept private and will not be shown publicly.

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

JOHN GILLIES

tHOSE 989 WHO ARE CEASED WILL GO ON TO LIVE A LONG AND HEALTHY LIFE JG...

4 days 4 hours ago
Chris Cornish

What a sticth-up. Looks like Labor Senator Jess Walsh follows Stephen Jones who follows what the industry super funds ...

4 days 1 hour ago
Peter Swan

This report is a blatant display of far-left factional partisanship, treating superannuation funds as state property and...

4 days 2 hours ago

ASIC has cancelled the AFS licence of a Sydney wealth firm, the fifth Sydney firm to see a cancellation since the start of the year....

2 weeks 5 days ago

More than 20 winners from the funds management industry have been crowned at this year’s awards....

1 week 5 days ago

ASIC has obtained interim orders from the Federal Court to freeze the assets of a registered managed fund and prevent its former director from leaving Australia. ...

6 days 1 hour ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND