SimplyBiz will acquire the entire share capital of Regulus Topco Limited, owner of Defaqto.
Defaqto operates a fintech platform for 8,500 advisers and provides ratings for 21,000 financial products and funds. Its ratings are used by 230 brands.
SimplyBiz, founded by IFA entrepreneur Ken Davy, says the combination of SimpyBiz and Defaqto will create a bigger fintech and support services group and enable both firms to expand into new areas.
Defaqto will help the group move into the general insurance and banking markets. SimplyBiz will offer Defaqto more access to the advisory and asset management markets.
Defaqto, based in Haddenham, Bucks, generated revenues of £12.8 million in 2018 and is said by SimplyBiz to be a cash generative business with high margins.
SimplyBiz, based in Huddersfield, has over 3,700 members and provides compliance and business services to financial advisers, including directly authorised IFAs, directly authorised mortgage advisers and workplace consultants.
The company has made seven acquisitions since launch in 2002, including Landmark Surveyors in January 2018.
It’s not known yet whether there will be any restructuring of the two companies but senior Defaqto management will be retained through an incentive scheme.
The deal will be 50% funded by SimplyBiz shares. There will a new placing of ordinary shares in the company with institutions to raise £29.1m to help fund the deal and future expansion.
Neil Stevens and Matt Timmins, joint chief executives of SimplyBiz, said: "We are delighted to announce the successful acquisition of Defaqto, which will play an important role in building on the group's strong momentum and enabling us to unlock a wide range of additional growth opportunities.
"The combination of the largest provider of outsourced regulatory and business support to the retail financial services market, with one of the leading providers of financial information and technology, will create a market leading platform across retail financial services.
Zahid Bilgrami, chief executive of Defaqto, said: "We are absolutely delighted with SimplyBiz's decision to acquire Defaqto. It opens an exciting new chapter in our development as a leading financial information business, and we look forward to the many opportunities that being part of a larger group will present.
"While it will enable us to continue operating in an independent and autonomous manner, it will also carry many advantages of being a part of a listed entity. It will enable us to develop new technology faster and thus continue to develop market-leading products for our clients at a time of vast technological change in the financial services sector."