Brisbane-based Harts Group bought RMI as part of its strategy of building a trans-Tasman business that can then be floated on the stock exchange.
Sovereign finance director Richard Coon says the offer from Harts was too good to refuse. He says the firm stands to make "a couple of million dollars" out of the deal.
Sovereign agreed to pay former owners Roger Moses and Gary Stevens up to $3.95 million for the business when the initial deal was consummated in April 1998. The final price was to be based on the performance of the business over the next three years.
Coon says RMI has been a very profitable business for Sovereign.
In the 12 months to March 31, 1998 it returned an after-tax profit of $300,000, and in the following 15 months, under Sovereign's ownership, that profit figure ballooned to $1.3 million, he says.
Coon says Sovereign intended to keep the business, however the Harts' offer was irresistible.
As part of the sale agreement, at Harts' insistence, RMI is contracted to continue using Sovereign's Aegis administration system for another five years.
Coon says; "there are many synergies between Reeves Moses and Harts and the prospects for Reeves Moses under Harts ownership are very exciting."
"New opportunities in the risk and mortgage areas will also be pursued," he says.
Coon says Sovereign is no longer looking to acquire other financial planning firms.
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