Rich lister Barry Lambert’s smart exit

Count Financial founder and former rich list member Barry Lambert ended a 30-year journey yesterday when he announced he would sell his business to Commonwealth Bank for $373 million.

It looks like a very well timed deal.

As Lambert said yesterday, the financial planning sector is undergoing a period of intense change, brought about mainly by a new regulatory regime that will ban commissions and force planners to consult more closely with clients.

Lambert yesterday told investors in a statement that “regulatory uncertainty” was a key reason for the deal; he was even more frank with the Australian Financial Review.

“We would have been able to compete [under the changes] but we may not have made much money.”

The move in the financial services sector appears to be towards bigger firms with larger economies of scale. Lambert, sensing life for Count was about to get tough, appears to have orchestrated a good deal.

Lambert and his family will take about $127 million off the table in the sale – a reward for three decades building the business.

He started the business in 1980 after 19 years with the Commonwealth Bank. The business started out doing accounting and tax work, but soon branched into the emerging area of investment advice.

Lambert changed the company’s name to Count Financial in 1997 and listed the business in 2000, in the middle of an investment boom. The shares, floated at 40c, would eventually soar to $3.48 in the middle of 2007.

Lambert, who joined BRW‘s Rich 200 list in 2006, would see his fortune peak at $252 million according to the magazine.

The GFC and post-GFC period (which saw the Government start its crackdown on the planning sector) had seen the share price fall to as low as 80c in early 2009. Indeed, CBA’s $1.40 offer was 34% higher than the company’s share price on Monday.

There were two things I always admired about Lambert.

First was his ability to produce profits – this year’s net profit of $52 million (up 113%) was the 31st consecutive annual profit the company had produced. To me, that demonstrates an ability to run a sustainable business in virtually any point of the business cycle.

Second was Lambert’s desire (until now at least) to remain independent. He was careful about the rate at which the business grew and mindful that growing too fast (and borrowing too much) could see his group lose its independence.

Even in this deal, Lambert has sort assurances from CBA that Count’s independence will be maintained.

“Count is a standalone business and it’s got to continue to be run by Count staff.”