Tilney and Smith & Williamson have confirmed a merger agreement, which is expected to build a £45bn AUM wealth business when finalised in 2020, under the name of Tilney Smith & Williamson.
In a statement on Thursday (19 September) the firms said they had agreed a deal that will see S&W shareholders receive consideration valued at £625m via a combination of cash consideration and shares in the enlarged group. The firm's management shareholders will be rolling the majority of their investment into the equity of the enlarged group.
Chief executive of Tilney Chris Woodhouse will become group chief executive while Tilney chairman Will Samuel will maintain his title for the combined group.
The group's board will comprise representatives from both firms, including co-CEOs of S&W Kevin Stopps and David Cobb, joint-CEOs of Smith & Williamson, with further details to be announced in "due course".
TS&W will have 80% of its £45bn AUM in discretionary mandates or funds, entrusted to approximately 280 investment managers, 260 financial planners and a professional services business with around 150 partners and directors.
It will have an enterprise value of approximately £1.8bn, with revenues of around £500m, and earnings before interest, tax, depreciation and amortisation of £150m.
According to the firms, the merger creates a "uniquely positioned" wealth management group with a wide geographic capability.
Woodhouse said: "The merger of Tilney and Smith & Williamson represents a compelling combination and together we will look to build on the considerable and complementary strengths of both firms.
"This is a transformational deal, which will create a truly unique business, able to support clients from across the wealth spectrum with a comprehensive range of services for both their personal wealth management and business needs.
"Given the excellent strategic and cultural fit between our businesses, I believe that the combined group is ideally placed to maximise the growth opportunities that we see in the market."
Cobb and Stopps said in a joint statement: "The enlarged group will be a leading wealth management and professional services business, benefiting clients and colleagues in both companies.
"The investment management and professional services market is changing rapidly, with the evolution of client needs accelerating.
"The combination of our two businesses creates real scale, broader capabilities and complementary service offerings, enabling the merged group to enhance existing client relationships and win a higher share of new business opportunities.
"We look forward to working with Tilney's management to complete the transaction and bring the two companies together."