A trading update from Tcam Asset Management offers an insight into why Seven Investment Management (7IM) swooped on the wealth boutique last year.
While Tcam's assets topped £1 billion in the year, preparations for its acquisition by 7IM pushed the company into the red.
Tcam recorded a pre-tax loss of £463,000 in the 12 months to the end of March 2018, according to accounts filed at Companies House. This compared to a record profit of £310,000 in the prior year.
Tcam co-founder (pictured), now a partner at 7IM after it acquired the firm last May, said: ‘These accounts weren’t from a normal year – we traded very well in 2017 but we were being sold, causing exceptional costs. Pre-tax profits were hit by share based payments, a slight increase in the goodwill charge and costs as we invested in the business.
‘We announced the acquisition by 7IM by the end of April/early May. They were prepared as we were getting ready to be acquired. That was a factor in a number of points such as costs, which were incurred around advice from specialist advisers around the transaction.’
Shining a light on the shape of the business when it was acquired, the accounts show that revenue rose by 8.6% to £9 million, while assets under management (AUM) climbed by 8% from £974.9 million to £1.1 billion over the period.
The firm’s administrative costs rose by 12.4% to £7.7 million. The majority of this was accounted for by the wage bill, which rose 11.2% to £4.7 million.
Over the period, the number of client-facing front office staff fell from 25 to 22, but the firm increased the total number of employees on the payroll from 64 to 65.
Montgomery said staff numbers fell after the merger, but the company is now hiring.
He said: ‘As you would expect when putting two business like this together, we’ve spent a lot of time looking at the business model for the combined entity and the right levels of support across all functions.
‘We have had to make cuts in some of the administration areas, where there was overlap. However, a new investment manager began work this month, we’ve advertised for another and we’re also looking for a new intermediary relationship manager.’