More aggressive expansion through M&A

I’m aware MarketsFlow is planning M&A in the USA and UK and, if I read correctly on CC, after the launch of the accessible portfolios, a Hedge Fund also approached MarketsFlow to acquire it!

One of the things that struck me is that these firms are willing for MarketsFlow to acquire them not with its own equity or cash but with the future revenues arising from the value-added through M&A. This is extraordinary and I think eye-catching. I think MarketsFlow could substantially benefit (resource-permitting) from actively approaching more firms for M&A under that model.

Although it is an ‘inorganic’ means of growth, I believe that it’ll help fuel organic growth in future (having more AUA and AUM as a base helps build market credibility to organically take on some more, in my view). Indeed, if the acquisitions were strategically distributed across the geographies of the jurisdictions MarketsFlow operates in, it’ll help increase the brand awareness and generate leads accordingly.

I think this could be a real winner in the MarketsFlow Growth story.

2 Likes

Cash-flow neutral M&A should certainly be considered if it helps generate AUM, but we need to be careful what the rationale is of those companies considering this route.

They either truly believe in the growth potential of MF, or sometimes in life when things look to good to be true it may be the case that these companies are looking for an easy way out.

@tom_mf I would be intrigued to understand the rationale of the HedgeFund for them wishing to be acquired by MF. It could be an intriguing hookup, worth exploring!

2 Likes

@VishalWilde yes I agree that M&A will have a role to play in MF’s growth plans. Although for now they are on the backburner due to the growth and trajectory of accessible portfolios. But you are right that they offer immense potential due to the nature of these deals which could be financed using cashflow of the acquiring party, and using MF’s platform to manage investments.

@Martijn we are getting a lot of interest from third-parties because they can see the growth traction and our regulatory approval structure. Currently they can only sell to HNWs with minimum £0.5m. By tying up with MF, they can harness the accessibility element along with the the app.

I also agree that MF should carefully weigh any approach with real long-term merits and rationale for deal-making.

2 Likes

@tom_mf, would a potential Appointed Representative structure work for some of these third parties? They could benefit from MF’s regulatory licences and potentially sell accessible portfolios. MF would benefit from a greater reach and at the same time wouldn’t need to pursue an M&A route where it wasn’t beneficial to you.

This would mean you wouldn’t have the risks and costs associated with M&A and would prevent management’s time and focus being tied up on this, when you’ve clearly got a lot on your plate with everything you want to roll-out at this stage.