Investment group Tilney and professional services firm Smith & Williamson said today they have agreed a merger which will create a combined business with an enterprise value of £1.8bn.
The combined firm will be called Tilney Smith & Williamson and have revenue of approximately £500m and profit of around £150m, the firms said.
Tilney is buying out Smith & Williamson shareholders with consideration of £625m, through a combination of cash and shares in the combined group.
Chris Woodhouse, chief executive of Tilney, said: “This is a transformational deal, which will create a truly unique business, able to support clients from across the wealth spectrum with a comprehensive range of services for both their personal wealth management and business needs.”
Mergers and acquisitions in the asset management and wealth management space is being driven by tightening regulation which has forced firms to seek economies of scale.
Both Tilney and Smith & Williamson have strong discretionary investment management businesses, while Tilney has a large financial planning arm.
The combined firm will be responsible for £45bn in client funds, 80 per cent of which is in discretionary mandates or funds.
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Smith & Williamson is also a top 10 UK accountancy firm which offers services such as tax planning to its clients.
In 2017 Smith & Williamson held an unsuccessful round of merger talks with wealth manager Rathbones.
Tilney launched an alternative bid, but Smith & Williamson chose instead to pursue a deal with Rathbones that ultimately collapsed.
Following the failed tie-up talks with Rathbones, Smith & Williamson publicly committed itself to a stock market listing by 2020.
The deal is expected to complete by early 2020 subject to regulatory approval.
Tilney was advised on the transaction by investment bank Evercore and law firm Freshfields Bruckhaus Deringer. Smith & WIlliamson was advised by investment bank Keefe, Bruyette & Woods and law firm Macfarlanes.