Prime’s Lincoln Indicators Buy Raises Questions on Integration and Earnings Impact
Prime Financial Group has acquired Lincoln Indicators, significantly expanding its wealth management platform and client base. The deal is expected to boost recurring revenue and contribute to Prime’s ambitious growth targets.
- Acquisition of Lincoln Indicators with $10M–$11M annualised revenue
- 15–20% EBITDA margin pre-synergies, with total consideration up to $17.9M
- Adds 3,300 high-net-worth clients and expands wealth management capabilities
- Deal funded primarily by cash and partly by shares, payable over three years
- Acquisition aligns with Prime’s strategy to double revenue to $50M by FY25
Prime Financial Group’s Strategic Expansion
Prime Financial Group (ASX: PFG) has announced a significant acquisition of Lincoln Indicators, a wealth management and investment research business, marking a pivotal step in its growth trajectory. The acquisition, valued at up to $17.9 million, is expected to enhance Prime’s wealth offering by adding a substantial client base and increasing recurring revenue streams.
Lincoln Indicators brings an annualised revenue of $10 million to $11 million with an EBITDA margin estimated between 15% and 20% before synergies. This acquisition represents a notable scale-up compared to Prime’s previous acquisitions, which typically ranged between $2 million and $3 million in revenue.
Enhancing Wealth Management Capabilities and Client Reach
The deal adds approximately 3,300 high-net-worth clients to Prime’s portfolio, expanding its distribution reach by a factor of ten. This influx of clients complements Prime’s existing wealth management, SMSF, and investment advisory services, positioning the company to better serve intergenerational wealth needs and diversify its revenue base.
Prime’s Managing Director and Chairman, Simon Madder, highlighted the acquisition’s alignment with the company’s strategy of growth through complementary, EPS-accretive acquisitions. The integration of Lincoln Indicators is expected to unlock significant cross-selling opportunities across Prime’s broader service lines, including accounting, business advisory, and capital management.
Financial Structure and Funding
The total consideration for Lincoln Indicators is structured over four tranches, with approximately 80% paid in cash and 20% in Prime shares, spread over a three-year period. An upfront payment of $4 million has been made, with the remainder contingent on future earnings performance. Funding will be sourced from Prime’s operating cash flow, existing debt facilities, and cash reserves, reflecting a balanced approach to capital management.
This acquisition is expected to contribute modestly to Prime’s FY25 revenue and earnings, supporting the company’s target to double its revenue from $26 million in FY22 to $50 million by FY25. Prime’s growth strategy combines organic expansion with strategic acquisitions, aiming for sustainable, recurring revenue growth and margin improvement.
Looking Ahead: Integration and Growth Prospects
Prime plans to leverage Lincoln Indicators’ technology platform, investment research capabilities, and client relationships to scale its wealth management services. The company also intends to invest further in IT infrastructure and team expansion to drive operational efficiencies and enhance client experience.
While the acquisition presents clear growth opportunities, the realization of synergies and the pace of integration remain key factors to watch. Investors will be keen to see how Prime balances organic growth with its acquisition pipeline to sustain momentum and deliver on its earnings guidance.
Bottom Line?
Prime’s acquisition of Lincoln Indicators marks a decisive step in scaling its wealth management platform, setting the stage for accelerated revenue growth and deeper market penetration.
Questions in the middle?
- How quickly will Prime realise synergies and integrate Lincoln Indicators’ operations?
- What impact will the acquisition have on Prime’s earnings per share and dividend policy?
- Will Prime pursue further acquisitions to maintain its aggressive growth trajectory beyond FY25?
