Permira-backed Tilney and Smith & Williamson have agreed to merge. The newly combined company will be renamed Tilney Smith & Williamson and serve as an wealth management and professional services company in the UK. The transaction is expected to complete in early 2020.
The Boards of Smith & Williamson and Tilney are pleased to announce that they have reached agreement to combine their respective businesses. The merged business, which upon completion will be named Tilney Smith & Williamson, will be the UK’s leading integrated wealth management and professional services group, offering an unrivalled breadth of value-added services focusing on private clients, businesses and charities.
The combination of Tilney and Smith & Williamson brings together two of the UK’s longest established and highly successful wealth management and professional services businesses, founded respectively in 1836 and 1881. Both firms have strong reputations for their high standards of professionalism, expertise and personal service.
Smith & Williamson shareholders will receive consideration valued at £625 million(1), to be satisfied through a combination of cash consideration and shares in the enlarged group. Smith & Williamson management shareholders will be rolling the majority of their investment into the equity of the enlarged group. The transaction values the combined business at an enterprise value of approximately £1.8 billion(2). The combined business will have revenues of circa £500 million and EBITDA of £150 million(2). The transaction is expected to complete in early 2020, subject to regulatory approvals.
Smith & Williamson and Tilney operate businesses that are highly complementary in the services they offer, the spectrum of clients they serve and in their geographic presence. The combined firm will be uniquely positioned to support clients with their personal wealth management needs and their business interests.
In addition to its strong investment management expertise, Tilney is a market leader in financial planning and has an award-winning digital investment platform in Bestinvest. Smith & Williamson is one of the most respected investment managers in the UK, offering leading expertise in tax advice and an extensive range of professional services through its status as a top ten UK accountancy firm.
It is the view of both Boards that the merger will deliver long-term benefits for clients, employees and investors. In particular, the combined group will:
· Create a unique and differentiated client proposition, covering professional services, financial planning and investment management;
· Share a fundamental commitment to client-centric values;
· Benefit from an expanded office network across 36 towns and cities in the UK, Ireland and the Channel Islands;
· Deliver investment services that can cater to the full range of clients’ investment needs, including execution-only investing, investment advisory services, centrally-managed and bespoke discretionary investment management;
· Have a powerful, multi-channel capability in its investment and financial planning business, allowing clients to interact in a way that best suits them, including face-to-face, an online platform and over the phone;
· Provide clients with continuity in the relationship with their investment manager, financial planner or professional services team; and
· Through increased scale, enable enhanced investment in technology for the benefit of its clients.
The Board of Tilney Smith & Williamson will comprise representatives from both firms. The Chairman of the merged business will be Will Samuel and Chris Woodhouse will be Group Chief Executive. Kevin Stopps and David Cobb, joint-CEOs of Smith & Williamson, will join the Board of the enlarged group upon completion. Further details of the combined Board will be announced in due course.
Chris Woodhouse, Chief Executive of Tilney, commented:
“The merger of Tilney and Smith & Williamson represents a compelling combination and together we will look to build on the considerable and complementary strengths of both firms. Like Tilney, Smith & Williamson has an excellent reputation for looking after its clients over many years and we recognise the value its culture and expertise will bring to the combined group. This is a transformational deal, which will create a truly unique business, able to support clients from across the wealth spectrum with a comprehensive range of services for both their personal wealth management and business needs.
“Tilney Smith & Williamson will be responsible for over £45 billion of client assets, of which 80% is in discretionary mandates or funds. It will have a significant number of trusted advisers, including approximately 280 investment managers, 260 financial planners and a professional services business with circa 150 partners and directors. Alongside the benefits of scale and an enhanced service offering, we will continue to focus on providing clients with a very personalised service, delivered by highly qualified professionals from locations across the UK, Ireland and Channel Islands. Given the excellent strategic and cultural fit between our businesses, I believe that the combined group is ideally placed to maximise the growth opportunities that we see in the market.”
David Cobb and Kevin Stopps, Co-Chief Executives of Smith & Williamson, commented:
“We are delighted to be merging with Tilney, a business that we believe is an excellent partner for Smith & Williamson. The enlarged group will be a leading wealth management and professional services business, benefiting clients and colleagues in both companies.
The investment management and professional services market is changing rapidly, with the evolution of client needs accelerating. The combination of our two businesses creates real scale, broader capabilities and complementary service offerings, enabling the merged group to enhance existing client relationships and win a higher share of new business opportunities. We look forward to working with Tilney’s management to complete the transaction and bring the two companies together.”
Tilney was advised on the transaction by Evercore and Freshfields Bruckhaus Deringer LLP. Smith & WIlliamson was advised by Keefe, Bruyette & Woods and Macfarlanes LLP.
Notes: (1) It is also proposed that Smith & Williamson will pay a special dividend to eligible shareholders from accumulated surplus reserves prior to completion. (2) Enterprise value is stated pre-combination benefits. Revenue and EBITDA (Earnings Before Interest, Tax & Depreciation) represent pro forma estimates and are also shown pre-combination benefits.