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McGrath announced it had taken a minority interest in its top-performing Central Coast franchise, in line with the group’s strategy of investing in quality businesses and partners.
The firm revealed through an ASX announcement that it had acquired a 30 per cent stake in McGrath Central Coast, which is headed up by Jaimie Woodcock and Mat Steinwede.
The acquisition comes as a coming-full-circle moment for Mr Woodcock and Mr Steinwede, who spearheaded the establishment of the first McGrath franchisee office at Terrigal back in 2005.
Since then, the duo has made significant headway in expanding the business and now heads six offices that boost approximately 1,300 properties under management and a project marketing team to boot.
The franchise’s solid rent roll and expansive team can be viewed as just a feather in the cap when taking into account the numerous accolades the McGrath Central Coast business garnered throughout its years of operation. In a testament to the business’ solid performance, Mr Steinwede has ranked in the Real Estate Business (REB) Top 100 Agents in Australia over the last six consecutive years.
McGrath assured that there would be no major reshuffling within the group’s Central Coast enclave, as key agents and management team were also revealed as equity owners of the business and would continue in their current capacity post-transaction, including the two principals.
“We are excited to be partnering with the McGrath Group in order to expedite our growth into the adjoining areas, which are amongst the fastest-growing communities in Australia. And I look forward to leading the charge,” Mr Woodcock stated.
Speaking on the group’s venture, managing director and chief executive John McGrath said: “This acquisition is in line with our strategy of investing in quality businesses and partners.
“I have known Jaimie and Matt for over 20 years and am pleased to say they are amongst the finest real estate professionals I have come across in my 40 years in real estate.”
On 22 August 2022, McGrath announced during its financial year-end investor presentation that it would take advantage of “key industry consolidation opportunities”, including strategic partnerships.
The group stated it was particularly focused on throwing its weight behind retaining key talent in a franchise business that has a “significant footprint”.
With an estimated gross sales value of more than $9 billion in the 12 months to June 2022, the NSW Central Coast region certainly fits this bill.
“They were our very first franchise partner, and I am very proud to have witnessed their outstanding success to date. However, we believe the best is yet to come as we look to expand the Central Coast business into the Lake Macquarie and Hunter regions”, Mr McGrath stated.
The minority interest equates to approximately $7 million and will be paid in majority in cash (67 per cent), while the remaining 33 per cent will be transacted using shares in McGrath.
It was also disclosed that the total consideration would be paid 60 per cent at completion. The remaining 40 per cent will be evenly aggregated during the first and second annual commemoration of the transaction.
The agreement also stipulated that the first- and second-year anniversary payments will be proportionally adjusted in line with the movements in the sales business earnings before interest, taxes, depreciation, and Amortisation (EBITDA) for financial years 2023 and 2024, respectively, against an agreed benchmark historical performance.
According to the release, McGrath will also issue 3,373,351 completion shares or new shares to the acquisition entity represented by Mr Woodcock and Mr Steinwede at an issue price of $0.41 per share.
Both parties of the agreement have also reached an agreement that the new shares will be subject to voluntary escrow for a two-year period to 30 September 2024 and the acquisition expected to be earnings per share (EPS) accretive in the first year post-completion.
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