Veteran solicitor David Dillon and fund expert and former Irish rugby player Paul McNaughton will share an immediate €4.3million gain from the sale of their Irish fund services business in 2020 after it performed much better than its new UK owner expected .
K-listed finance company MJ Hudson has been forced to raise £9m (€10.6m) in the stock market to fund an earn-out payment for Dublin-based Bridge group.
Bridge Group’s assets under management have grown from EUR 6 billion to over EUR 70 billion in less than two years, while turnover has doubled to EUR 8 million.
The Irish company provides specialist fund sector support services and offers regulatory compliance, domiciliation and risk services and third party administration services.
The Bridge Group was spun off from the law firm of Dillon Eustace in 2016 and was acquired by Mr Dillon and Mr McNaughton.
Mr. Dillon, founding partner of Dillon Eustace, resigned from the law firm at that time to take on a non-executive role with Bridge Group.
Prior to The Bridge Group, Paul McNaughton spent a decade at IDA attracting foreign investment. He then built up Bank of Ireland’s funds business in the IFSC before moving to Deutsche Bank to build up the funds business in Ireland.
McNaughton, a former Ireland rugby international, won 15 caps between 1978 and 1981 and later became team manager for Ireland, working alongside head coach Declan Kidney.
MJ Hudson completed the Bridge Group acquisition in early 2021. The purchase of the Irish company would build on the British group’s specialist funds businesses in London, Luxembourg and Guernsey and add a strategically important region to its network.
The purchase price included an initial fixed consideration of €2 million in cash, with deferred and additional earn-out consideration of up to €10 million, payable over a period of two years. This additional consideration will consist of 80 percent cash and 20 percent shares.
In the 12 months to September 2020, the Bridge Group generated earnings before interest, taxes, depreciation and amortization of around €500,000 on sales of €4 million. Revenue was expected to increase by 30 percent in the following fiscal year.
MJ Hudson said this week that Bridge Group’s growth over the past year has significantly exceeded estimates at the time of the acquisition.
It added that under the terms of Bridge Group’s regulatory license MJ Hudson had to accelerate its investment in the Irish company’s regulatory capital by €6.1m, versus a lower amount than envisaged in the original business plan.
“As a result, Bridge Group has the maximum regulatory capital threshold of 10 million. This regulatory capital must be earmarked.
“As such, the accelerated investment required to fund this regulatory capital has placed additional cash constraints on the Group, requiring it to fund earn-out consideration to be paid out of a portion of the net proceeds of the fundraising,” said MJ Hudson. “The company will pay EUR 4.3 million to Bridge Group suppliers, leaving a balance of up to EUR 1.8 million to be paid based on future performance.”
https://www.independent.ie/business/windfall-worth-43m-for-irish-finance-duo-after-sale-of-funds-services-firm-41906415.html €4.3m windfall for Irish financial duo after sale of fund services business