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Distractions hit Sterling idea

LESS than one month after it went to the market, Sterling Financial Services has withdrawn its prospectus.

Sterling and the Financial Services Group went to the market with prospectuses seeking funds to support their consolidation activities.

Both were planning multi-disciplinary practices that offered clients tax advice, accounting services and financial planning.

Sterling hoped to raise $5 million from its prospectus and had options to purchase six WA-based accounting practices that have about 6,500 clients and generate $2.5 million in fees between them.

Sterling CEO Richard Lambe said since the company lodged its prospectus, a number of financial services opportunities had arisen.

“These opportunities would have had an affect on the prospectus. We decided to withdraw it until the negotiations regarding these opportunities pan out,” Mr Lambe said.

FSG is pursuing its plan to raise $6 million. However, the offer which has been underwritten to $3.5 million, has been extended by another month and now closes on April 14.

The group also plans to buy six WA-based accounting practices that bill about $3.7 million in fees between them.

There are three major consolidators operating in Australia – Stockford, Hearts and the Investor Group. None of them are believed to operate in WA.

They had been mostly buying up small practices but Stockford’s purchase of second-tier firm Mann Judd in Melbourne made the industry take notice.

International financial groups such as American Express have shown interest in buying Australian accounting practices in an attempt to gain access to their client lists, but their entry into the market seems unlikely.

A month ago, Australia’s peak accounting bodies suggested their members view offers from accounting consolidators carefully.

At the time, Australian Society of CPAs said the society would not stand in the way of market forces.

The society said it would help any members concerned about aggressive consolidators.

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