Prime’s Acquisition of Lincoln Indicators Raises Integration and Earnings Risks
Prime Financial Group has agreed to acquire Lincoln Indicators, a leading Australian investment research and funds management firm, significantly boosting its wealth management capabilities and client base.
- Acquisition of 100% of Lincoln Indicators and associated intellectual property
- Adds approximately 3,300 high-net-worth clients and $600 million in funds under management
- Total consideration up to AUD 17.9 million, paid over three years in cash and shares
- Expected annual revenue contribution of $10-11 million from FY25, EPS accretive
- Lincoln Indicators’ co-founder Tim Lincoln to join Prime’s Wealth leadership team
Strategic Acquisition to Broaden Wealth Offering
Prime Financial Group Limited (ASX: PFG) has announced a binding agreement to acquire Lincoln Indicators Pty Ltd, a Melbourne-based leader in investment research, portfolio management, and funds management. This move marks a significant step in Prime’s strategy to expand its wealth management services and distribution reach within the high-net-worth investor segment.
Lincoln Indicators brings with it a well-established client base of approximately 3,300 high-net-worth investors and around $600 million in funds under management. Its flagship Stock Doctor product offers proprietary quantitative research tools that empower self-directed investors and SMSFs to identify promising stocks and manage portfolios effectively. Complementing this is Lincoln’s suite of managed funds, including the Australian Income, Australian Growth, and U.S. Growth Funds, all leveraging Lincoln’s quantitative screening methodology.
Financial and Operational Impact
The acquisition is structured with a total consideration of up to AUD 17.9 million, contingent on Lincoln Indicators meeting or exceeding EBITDA targets over the next three years. Payments will be made through a combination of approximately 80% cash and 20% Prime shares, spread across four tranches. Additionally, Prime will acquire intellectual property rights with fixed and performance-based payments, including a royalty on future performance fees.
Prime anticipates Lincoln Indicators will contribute $10-11 million in annual revenue from FY25, predominantly recurring, and deliver a positive EBITDA contribution. The acquisition is expected to increase Prime’s revenue by nearly 24% and EBITDA by close to 14%, underscoring its accretive nature. Funding will come from Prime’s operating cash flow, debt facilities, and cash reserves, with no shareholder approval required due to the transaction’s scale relative to Prime’s overall operations.
Strategic Synergies and Market Positioning
Beyond the immediate financial uplift, the acquisition enhances Prime’s ability to cross-sell services across its existing wealth management, SMSF, and capital advisory businesses. Lincoln Indicators’ client longevity, many have been with the firm for over two decades, provides Prime with a stable and loyal customer base to deepen relationships and expand product offerings.
Prime’s Managing Director and Chairman, Simon Madder, highlighted the strategic fit, noting the acquisition’s alignment with Prime’s growth ambitions in the burgeoning Australian wealth market. With around 690,000 high-net-worth individuals managing $3.4 trillion in investable assets nationally, Prime is positioning itself to capture a larger share of this expanding segment.
Leadership and Integration
Tim Lincoln, co-founder and managing director of Lincoln Indicators, will join Prime’s Wealth leadership team, ensuring continuity and leveraging his expertise to integrate the businesses effectively. Prime’s track record of successfully incorporating founder-led firms bodes well for a smooth transition and maximising operational synergies.
Completion remains subject to standard conditions, including change of control consents for material contracts. Prime will host a live webinar to discuss the acquisition and answer investor questions, signaling transparency and engagement with stakeholders.
Bottom Line?
Prime’s acquisition of Lincoln Indicators sets the stage for accelerated growth in wealth management, but integration execution will be key to unlocking full value.
Questions in the middle?
- How will Prime manage integration risks to retain Lincoln Indicators’ long-standing clients?
- What are the specific cross-sell opportunities Prime plans to prioritise post-acquisition?
- How might future performance-based payments and royalties impact Prime’s earnings volatility?
