HUB24 looks to shore up market leadership with $40m acquisition of myprosperity

Founder-led communications software provider for accountants myprosperity has been acquired by listed financial services platform HUB24 (ASX: HUB) in a bid to enhance the latter’s existing services and to empower the financial futures of clients.

The deal will see myprosperity shareholders receive $40 million of HUB24 shares in exchange for 100 per cent of the target, and up to a further $11.5 million of the acquirer’s securities may be passed onto the Peter McCarty-founded company subject to performance milestones being hit over the next three years.

Speaking to Business News Australia, HUB24 managing director Andrew Alcock says the acquisition will consolidate the company’s market-leading position and capture further market share and new growth opportunities.

Founded by McCarthy in 2011, myprosperity is a cloud-based platform that facilitates communication between accountants and advisers with their clients, enabling digital document signing, budgeting and goal setting via an all-in-one desktop and mobile application.

The company boasts 440-plus accounting and financial advisory firms as clients, around 16,000 premium subscribers, and $4 million in revenue generated in FY23 based on current forecasts.

The premise meshes neatly with HUB24’s existing platform which offers a bundle of financial services solutions that manage customer portfolios, investments, superannuation and insurance including the likes of Class which it acquired in 2022.

“[The acquisition] allows us to leverage an investment that the myprosperity founders have made for 11 or 12 years to build a market-leading portal and integrate it with our stable so we get there faster and create that utility,” Alcock says.

“Currently we’re ranked number one as a platform and our goal is to continue that journey. This allows us to underpin our current standing but also extend our lead in the marketplace from a shareholder perspective.

“We were really driven by the idea of how we empower our clients’ financial futures and this does that from our perspective. This industry has for too long struggled to reduce friction and build truly data-driven solutions. That’s what we’re about.”

The company says integration of the myprosperity platform with HUB24’s is planned initially, followed by the development of a single client portal for the entire merged group portfolio of products and services.

Further, HUB24 will maintain myprosperity as a separate business unit with its 30-plus team to remain headquartered in Melbourne under McCarthy’s leadership as CEO of the subsidiary.

Alcock says the greatest benefit for users will be a single login that gives them access to a wide range of solutions and resources via its growing tech ecosystem.

“Imagine you can log in to one portal which securely signs you into the platform, to your assets that are administered off-platform, and you can share all the information together and your accountant or your advisor can see it in one place rather than logging into multiple places to get the job done,” Alcock says.

“And then we can do neat things like if you need to provide consent to make a particular investment or a particular corporate action, you can provide that consent through that portal and it flows into the other products.

“So it really is giving an integrated experience rather than the many-to-many relationship that clients and advisors have now with different solutions. It’s about building an integrated suite of products and services.”

The managing director sings the praises of the myprosperity team and the ‘entrepreneurial culture’ nurtured by McCarthy who has been running the business since 2011.

“Peter was formerly a financial planner and is deeply passionate about changing the industry and making things better for advisors and accountants and that’s what’s driven him to produce this business with a talented team,” Alcock says.

“Peter’s of the same mindset in terms of what he’s built - we’re like-minded and culturally aligned so it makes sense for us to join together.

“But as I said, it’s a self-contained business. We want to not interrupt, we want to allow it to benefit from its innovation and great strides.”

According to HUB24, the transaction is expected to be underlying EBITDA positive in FY25, and the deal is set to close prior to 30 June.

Shares in HUB closed down 2.33 per cent yesterday to $27.22 per share.