HUB24, an Australia-based independent platform provider, has agreed to acquire 100% of the shares in an independently owned financial planning group Paragem.
Subject to satisfaction of conditions, the transaction is expected to complete over the next few week.
The acquisition comprises of an initial cash consideration of $1milllion that will be paid at completion with a deferred cash payment of up to $1 million paid after 12 months.
Also, the deal includes a capped earn-out consideration of an additional $6 million will be subject to financial performance measured over three years and will be paid in HUB24 ordinary shares by 30 September 2017.
Paragem, founded by Ian Knox and Charlie Haynes, currently has 20 financial advisory practices across Australia which together advise on more than $2.5 billion of client funds.
As part of the transaction, Knox and Haynes who will be retained by HUB24 and will enter into executive service agreements with similar remuneration and performance incentives to those of existing HUB24 executives.
Hub24 said the acquisition of Paragem is consistent with its strategy to pursue significant growth by partnering with quality independently-minded financial advisers.
Following the acquisition, both HUB24 and Paragem will retain their existing brands and will continue to operate independently.
Additionally, Paragem will maintain its open architecture approach to approved products and platforms , while Hub24 will maintain its focus on supporting the growth and prosperity of its existing licensee clients as well as pursuing new client opportunities.
Andrew Alcock CEO HUB24 said: "In addition to providing our HUB24 retail products to advisers, we will continue to focus on our core business providing white labels to financial planning groups, accountants and stockbrokers whilst also developing and supporting the Paragem business.
"HUB24’s platform will enable Paragem advisers to act in the best interests of their clients," he added.
Ian Knox, managing director of Paragem, said: "Paragem’s client base is well suited to Separately Managed Account (SMAs) investments that are professionally constructed and managed and we reviewed the entire market before determining HUB24 was the most suitable partner."