FRP Advisory acquires boutique firm Spectrum Corporate Finance

Professional services provider FRP Advisory Group announced the acquisition of boutique corporate finance and debt advisory company Spectrum Corporate Finance on Monday, for initial consideration of £9.4m.

The AIM-traded firm said there could also be a further payment contingent on the net assets at completion of up to around £3m.

It said the five key selling shareholders also entered into a subscription agreement to reinvest £3.76m of the proceeds into new shares to be issued by FRP.

Spectrum was founded in 2010 by Simon Davies, Clive Hatchard and Ian Milne, and provides coverage of the UK from offices in Reading and London, with particular focus on the central South, South East and London.

All 27 colleagues would join FRP including seven partners, 12 other fee earners, four research colleagues and four support colleagues.

In the last reported financial year ended September, Spectrum recorded unaudited revenues of £4.0m and unaudited adjusted EBITDA of £0.5m, with several large transactions falling into the current financial year as a result of the adverse impact of Covid-19.

In the previous two financial years to September 2018 and 2019, Spectrum averaged unaudited revenues of £6.4m and unaudited adjusted EBITDA of £2.5m.

On an annual basis going forward, it was expected that Spectrum's underlying incremental contribution to FRP would be revenue of £7.5m and adjusted EBITDA of £2.1m.

However, within specific financial years there would be timing volatility of when transactions complete, the board warned, as demonstrated by Spectrum having completed 12 transactions in the fourth quarter of the 2020 calendar year.

“Spectrum is another excellent addition to FRP, in line with our strategy to complement our organic growth with high quality selective acquisitions,” said chief executive officer Geoff Rowley.

“It further bolsters our corporate finance and debt advisory offering, following the East Anglian JDC Group acquisition in September, as well as strengthening our UK footprint.

“Nationally, FRP's corporate finance and debt advisory teams would now comprise 48 fee earners, including 18 partners, across nine locations.”

Rowley said the “highly complementary” combination would give FRP a key position in the UK mid-cap transactional advisory market, enabling it to continue supporting clients post-Covid-19, in addressing both their strategic ambitions and being available to help as challenges arose.

“The Spectrum team have earned themselves a great reputation, particularly within the UK private equity community and we are excited about the contribution they will make to FRP.”

At 1039 GMT, shares in FRP Advisory Group were up 4.26% at 108.95p.