Ince sells Arden Partners just seven months after merger

The AIM-traded firm said after its recent management changes, the disposal formed part of its strategy to re-focus on its core legal services business and to dispose of businesses that were not closely aligned to it.

In addition, the board said it was implementing a number of changes in line with its previously-announced cost rationalisation programme and growth strategy, particularly in light of prevailing market and economic conditions.

Following its acquisition by Ince in April, Arden saw good retention levels among its broking clients.

However, the recent macroeconomic headwinds experienced by the capital markets in London had delayed a “substantial part” of Arden's transaction pipeline into early next year and beyond.

In addition, the continuing pressure on revenues and operating margins within the small-cap broking sector had increased the requirement for investment and scale in Arden's business, at a time when Ince was “least able” to make such a commitment.

The most recent audited annual results of Arden for the year ended 31 October 2021 showed revenue of £9.28m and a profit before tax of £0.85m, with net assets of £5.76m.

Since then, Arden revenue for the current financial year-to-date had declined “significantly”, Ince said.

That decline was largely attributed to the increasingly-challenging fundraising market and wider economic conditions in the UK since early 2022.

As a result, Arden was currently loss-making, and the opportunities and benefits that were identified by Ince at the time of the acquisition were now not expected to be achievable for the group, given its current resources.

The board said the disposal would allow Ince to concentrate its investment and resources on its core legal services business, where the directors believed there were a number of “significant” growth opportunities.

Ince said it would receive consideration of £1m in cash on completion, on the basis of there being £1m of free cash in Arden, and no material outstanding debt.

In addition, there would be earn out consideration payable by Zeus of up to £2m based on certain Arden revenues received by Zeus in the three months following completion.

The board said the proceeds would be used for working capital requirements.

“In challenging market and economic conditions, the disposal of Arden will allow Ince to focus its resources on its core legal business where there are increasing opportunities,” said chief executive officer Donnie Brown.

“It also benefits Arden whose clients and employees will become part of a much larger business that is well positioned in the London equity markets.

“We continue with our re-focussed strategy for growth and cost rationalisation which is already achieving positive results.”

At 1401 GMT, shares in the Ince Group were up 1.09% at 6.93p.

Reporting by Josh White for Sharecast.com.