Benefits to Investment Managers

RETENTION OF AUTONOMY & CONTROL

Most independently owned Investment Managers search, from time to time, for one or more of the following:

  1.  Capital to buy out external shareholders
  2.  Capital to fund business expansion
  3.  Monetisation of value
  4.  Distribution

Alpha Strategic can assist. And we do so without intervening in the day-to-day management of the Investment Manager’s business. We structure our transactions such that we are not involved in the profit and loss account of the companies in which we share revenue. We believe it is very important that the principals in the business retain control without interference and thus retain the incentives that drove them to success in the first place. We do not wish to be involved in decisions (and possible conflicts) about management compensation or overheads, hence our wish to acquire a share of top line revenue, and to maintain a purely advisory role.

MULTIPLE

Most privately owned Investment Managers consider that their businesses trade on a P/E of one. Since mid 2007 quoted specialist investment companies have traded on P/Es ranging from 5 to 30. As more Investment Managers join the Alpha Strategic fold, our multiple should rise to reflect our growing stability and diversity. Revenue surrendered by an Investment Manager will be multiplied significantly and that value will be reflected in shareholders’ holdings in Alpha Strategic.

STAFF INCENTIVES & SUCCESSION PLANNING

Privately owned Investment Management firms face significant difficulties devising long term incentive structures for staff. Revenue compensation is never enough, and sooner or later key staff members will look for capital involvement. Once options or shareholdings are acquired, frustration can again set in at the apparent likelihood of a capital event. Alpha Strategic can provide an efficient vehicle to create these incentives and a capital event, with the added bonus of leaving control of the business with the founders. In addition, cash flow difficulties associated with contingent bonus liabilities held on the balance sheet can be ameliorated using Alpha Strategic stock.

CHARITABLE GIVING

A charitable gift of AIM shares is permitted and can be easily the most tax efficient method of giving. Not only do higher rate tax payers get an immediate deduction against income at the top rate, but capital gains tax on the shares is also avoided. Hence a charitable gift of £1m of Alpha Strategic stock would result in an effective tax saving of around £500,000 to the donor.

TAX ADVANTAGES

A transaction with Alpha can bring significant tax benefits, effectively swapping revenue for capital. This can also be useful in solving onshore/offshore situations tax efficiently.