A desire for scale and resource, alongside the rising cost of doing business led Taylor Young Investment Management’s chief Peter Thomson to sell the business to Rathbones.
Speaking to Wealth Manager, Thomson said the depth of Rathbones’ research and resources, coupled with cultural similarities between the firms, drove his decision to sell Taylor Young, which has £337 million under management, for a sum that could total up to £15 million.
In the face of rising operational and regulatory costs he noted ‘scale and resource are absolutely key’, and expects M&A to rise. ‘The cost of doing business is a key factor, therefore economies of scale are important. I imagine this is a cyclical thing. I expect to see more of it,’ he said.
The deal consists of an initial payment of £2.6 million with expected payments of deferred consideration based on how much in assets transfer to Rathbones over the next 18 months. The total purchase amount will be capped at £15 million, although Rathbones said it expected to pay around £10 million overall. Taylor Young was formerly a subsidiary of Greek asset manager Alpha Trust.
The official integration of Taylor Young into Rathbones is set to be completed by next summer, when it moves onto the Rathbones’ platform and into its Curzon Street, London office.
Former cover star Thomson (pictured) will then move to Rathbones as an investment director to head the Taylor Young investment team, who will all transfer over having been locked in with earn-out arrangements. He said the rate cards were broadly in line, so he does not envisage a material change in fees for clients.
‘We will be able to operate an investment process as part of their investment process. Having the freedom to manage portfolios and contribute to their research process is essential,’ he said.
Rathbones said no formal decision has been made on the future of Taylor Young’s fund range, although one possibility was a transfer to Rathbone Unit Trust Management.
In the year to the end of 2011, Taylor Young posted an 11% decline in assets under management to £337 million, which it put down to volatile markets, alongside a 6.8% decline in turnover to 2.7 million, resulting in an operational loss of £329,000 versus a £96,000 loss the previous year.