Centrepoint Alliance will acquire the financial advice businesses of ClearView Wealth for $15.2 million, the two companies announced last week on the day they released their full-year earnings results.

The acquisition of ClearView Financial Advice, Matrix Planning Solutions and LaVista Licensee Solutions will be financed through a cash consideration of $3.2 million and issuance of $12 million in escrowed shares, an arrangement that will see ClearView holding a 25% stake in Centrepoint Alliance.

The deal is expected to complete on or about October 31, subject to regulatory approvals and other customary conditions.

ClearView Financial Advice and Matrix Planning Solutions are mid-sized dealer groups with 175 financial advisers operating under their licences as at June 30, and LaVista has 34 adviser practices.

While they have leading edge technology, a strong management team and robust compliance processes, they suffer from a lack of scale that results in sub-optimal profitability, ClearView says.

“There is a significant opportunity for these businesses to scale the current ‘infrastructure’ to support a larger number of [Australian financial services licensees] and financial advisers and thereby create significant profit uplift through extraction of material synergies,” ClearView said.

It says the deal with Centrepoint Alliance provides the combined entity with “immediate scale, a strong and effective management team… and the capability to take a market leading position in the financial advice industry to build a strategically successful and profitable financial advice business”.

“Much of the value of the transaction is in the strategic value and extraction of significant synergies and creation of a platform and capability to further consolidate the market,” ClearView said.

“It further allows ClearView to indirectly participate in the industry consolidation (given structural market changes) and at the same time separate its product manufacturer and financial advice arms.”

Centrepoint Alliance CEO John Shuttleworth says the purchase represents the next phase of growth for the business providing immediate scale and a platform to increase long-term value and profitability.