Fairstone has surpassed £20bn in assets under management (AUM) with the completion of its latest deals this spring, marking a key tipping point in its long-term growth strategy.
The firm announced internally in October that it has launched its updated strategy to adapt to market opportunities and is also refining its acquisition model to accelerate the journey towards £40bn AUM by the end of 2030.
A key pillar of Fairstone’s new 2030 strategy is evolving its Downstream Buy Out (DBO) model into a form that now has multiple dynamic valuation elements. These enhanced economics are a response to changing market conditions and are specifically targeted at high growth firms that are looking for greater overall sale value.
Lee Hartley (pictured), chief executive at Fairstone, said: “Reaching £20bn AUM is a meaningful milestone, but our focus is firmly set on the next phase of our business plan. Our target is to reach £40bn AUM by the close of 2030, and we have laid out a clear roadmap to achieve this.
“It’s evident that the sector has changed significantly in recent years. We see the benefit in refining our DBO model to attract the most ambitious partner firms, expanding the breadth of our wealth management offering, and strengthening our regional hub structure.
“The enhancements to our DBO model are designed to dovetail with our new 5-year strategy. Our updated acquisition offering will deliver greater flexibility across a number of deal mechanics. These higher value components are aimed at ambitious firms that have the appetite to scale by approximately 50% over the term of our partnership.”
Fairstone further said its DBO model had consistently exceeded the expectations of business owners, with firms completing the acquisition process over the past two years achieving, on average, 120% of their full sale acquisition value.
Steve McNicol, chief development officer, added: “Since its inception, we’ve partnered with over 90 firms via the DBO programme, successfully expanding our footprint across the UK and Ireland. We have a very clear understanding of the firms that represent the best fit, those focused on long-term value rather than an immediate sale. In essence, those that are focused on capturing long term value, rather than those that will set a ceiling on their capital value by simply selling today.
“We are taking a very targeted approach to regional expansion, identifying a shortlist of growth-focused firms in the geographies that align with our plans. For those firms, the evidence speaks for itself. We have already published our earn-out data twice, and we will do so again when we announce the updates to the model.”
“The success of the DBO approach is demonstrated in one of its most recent completions, Andrew Cohen Associates, which achieved 180% of its initial target value, reflecting the strong outcomes experienced by firms that have completed the unique buyout journey.
Frank Banks-Seeney, former principal at Andrew Cohen Associates, who joined the Fairstone Group five years ago, commented: “The DBO proposition gives us the investment and support to focus on clients while growing the business. The transition was well structured, ensuring continuity for clients while integrating with Fairstone’s wider support services. We’ve maintained our local presence and also benefit from the scale of a national chartered firm.
Hartley concluded: “Our new strategy shows that we are confident in our ability to capture the opportunities in front of us. Importantly, however, the fundamentals remain unchanged. We want to expand in selected locations, continue to deliver the best possible client outcomes, and create long-term value for our partner firms.”
