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Yellow Brick Road’s acquisition of Vow Financial looks good on paper but will still have to prove itself in practice, according to Vow’s former boss.
Yellow Brick Road announced yesterday that its $17.6 million acquisition of Vow had been approved by Vow’s shareholders – although its own shareholders still have to approve the deal.
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Jeff Zulman, who was Vow’s inaugural chief executive, said Yellow Brick Road had targeted a stable business with a proven leadership team, strong cash flow and a good broker network.
He also told The Adviser that the two companies were a logical match because of their shared commitment to diversification.
“It ticks all the boxes. The question is whether Yellow Brick Road can make the acquisition more than the sum of the parts," he said.
“This appears to be a good philosophical fit if nothing else, but the devil is in the detail and the ability to successfully integrate will become an operational more than a strategic challenge.”
Mr Zulman said Vow’s brokers would probably benefit if the deal were implemented as advertised because it would likely mean new revenue streams and maybe new products.
However, he told The Adviser the real question is how will the deal impact Yellow Brick Road given that Yellow Brick Road is the one spending the money.
Mr Zulman said consolidation had been on Vow’s radar since the group was born four years ago through the merger of National Brokers Group, The Mortgage Professionals and The Brokerage.
He said there had been an understanding that Vow would either acquire smaller players or be purchased by a larger group.
Meanwhile, Yellow Brick Road executive chairman Mark Bouris has described Vow as the ideal partner to help Yellow Brick Road become the country’s leading non-bank.
“With a network of 700 brokers, above-market mortgage volumes and a book in excess of $18 billion, Vow offers a model and structure that complements Yellow Brick Road’s business,” Mr Bouris said.
