London corporate advisory business Stockdale sold for up to 5.9 earnings multiple

Corporate advisory and security business Stockdale Securities has been bought by AIM-quoted independent investment group Shore Capital.

The acquisition will result in the creation of the fourth biggest corporate broking business measured by number of retained Main Market and AIM clients, behind Numis Securities, JP Morgan Cazenove and Peel Hunt.

The combined firm will have revenues of over £53 million, with around 125 advised clients and will provide research on over 300 equities.

Stockdale has 41 staff and focuses on small to mid-cap companies and listed investment funds, serving an institutional and corporate client base.

Over the past three years, Stockdale has been involved in more than 70 transactions with a combined value of £3.9 billion. In the latest financial year, to 30/9/2018, Stockdale reported sales of £11.4 million with pre tax profits of £1.5 million.

Shore Capital’s latest published accounts (2017), reveal income of £41.9 million with net profit of £4.6 million.

Negotiations to acquire Stockdale have been going on for several months and involved discussions with 55% stakeholder Somers Ltd, a Bermuda Stock Exchange listed financial services investment holding company.

Shore’s co-CEO Simon Fine said “we are delighted to welcome the Stockdale team to Shore Capital. The combination of our complementary businesses adds scale, expertise and diversity to Shore Capital, demonstrating our commitment to serving the needs of our combined institutional and corporate clients.” He added that Stockdale’s business was complementary, with good client relationships, good people and a good reputation.

Mark Brown, Chairman of Stockdale said: “Shore Capital and Stockdale share a like-minded, commercial approach which we believe will be an excellent fit, with the scale of the combined business enabling it to grow and benefit from the opportunities that lie ahead.”

The price paid by Shore Capital for Stockdale was £4.9m with an additional performance-contingent earn-out of £4m. If the target is reached, the sale price will equate to an earnings multiple of 5.9. Completion of the acquisition is conditional upon FCA consent to the proposed change of control.

The industry is buzzing with chat at the minute about possible acquisitions and tie-ups. Recent EU regulations have affected the trading of financial trading firms and there is a clear advantage in broadening and strengthening service offerings in a competitive marketplace.

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