Snowball Grouphas announced it will merge with boutique Sydney financial planning firm, The Ferguson Group, to expand its planner and support staff numbers as well as increase its Sydney presence.
The combined business, which will trade under the Snowball banner, will have $640 million in funds under advice, with Ferguson’s 11 planners advising clients with $55 million in investment funds.
Snowball managing director Tony McDonald says the merger marks a step along the way toward the group’s strategy of increasing profitability and scale through merger and acquisition activity.
“We have been on the lookout for suitable purchases of financial planning businesses of the calibre of Ferguson, particularly in Sydney,” he says.
McDonald says the merger is based on the two companies’ close cultural fit, similar client profile and strong commitment to client service.
He says that as synergies between the businesses are realised he expects clients will be satisfied with the additional benefits of strength that the merged business brings them.
Snowball is purchasing Ferguson for an upfront consideration of $480,000, with further payments to be made based on revenue retention after one year.
The initial payment will be funded through the placement of over 2.25 million shares at $0.20 with 1.5 million of these going to existing shareholder Trent Capital, boosting its holding in Snowball to 6.44 per cent. The remaining 750,000 shares will be placed with an unnamed institutional investor.
Ferguson managing director David Bellingham says the merger gives his group additional resources, access to financial education tools and the ability to meet Financial Services Reform responsibilities.
“At the same time, it allows us to retain our commitment to providing independent advice, which we know is a key issue for our clients,” he says.
McDonald says that Snowball will continue to be on the lookout for both smaller businesses such as Ferguson or a potential “merger of equals” with another business that he says could add profitable scale.
