Fairstone acquisitions continue to outperform with average earn-out payments of 116%

Building on its commitment to transparency, Fairstone has published its full earn-out data for a second time, showing that firms joining the group are continuing to exceed their target sale values and receiving pay-outs far above their initial valuation.

The data released today reveals that firms acquired by Fairstone received an average of 116% through the earn-out process which has increased from 111% in the first round of analysis in 2018. More importantly, the figures show that none of the firms that Fairstone have acquired received less than 100% of their cash consideration.

Fairstone CEO Lee Hartley said: “When used properly, earn-outs can provide business owners who are looking to sell with an additional opportunity to increase sale value after the point of transaction. Earn-outs could and should enable shareholders to benefit from continued growth.

“Fairstone has deliberately designed its five-layer acquisition model to enable selling shareholders to optimise their sale value and receive the entirety of their capital value.

“Our earn-out results really are unprecedented anywhere in the sector and we are the only acquirer to have an open-book policy on these results. I like to think the transparency of this approach sets us apart from our peers. In very simple terms, we’re buying great businesses, supporting them to be the best they can be and then sharing the upside.”

Highlights of the latest robust results include:

• Every single acquisition received at least 100% of their target earn-out value
• 25% of firms received more than 20% excess above their target earn-out value
• 43% of firms received more than 5% excess above their target earn-out value
• Average excess sale proceeds across all acquisitions and all earn-out stages is 16%
• Fairstone made total excess consideration payments to date of £18.9m

Ralph Mitchell, former principal of Leicester-based Brett and Randall, which was acquired by Fairstone in 2019, added: “I can honestly say that things couldn’t have gone better; since partnering with Fairstone, revenue has increased by 40% and profitability is up 50% too.

“What’s more exciting is that this is only the start of the journey. Fairstone’s proposition means we have the opportunity to build on this growth trajectory and secure greater long-term value.”

Hartley continued: “As a business we really believe that our offering is a partnership more than just a purchase. Allowing shareholders to maximise their long-term value is a central aspect of our Downstream Buy Out acquisition model. This is borne out in the firms we acquire who are exceeding their target sale values and consistently receiving consideration far above their original transaction target.

“We have the proven ability to support long-term organic growth at a multitude of levels and share the value that creates, and I am delighted to be publishing the evidence of our continued success.”

Sell the smart way, Fairstone acquisitions consistently achieve more than 100% of their sale value

Speak to our Mergers & Acquisitions team to find out what Fairstone can do for your business or download our optimise your value guide to learn more.