Alpha Financial Markets Consulting plc - Revision history

95.149.241.163: /* What are the key risks of investing in the company? */

2023-02-07T20:04:46Z

What are the key risks of investing in the company?

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	As with any investment, investing in Alpha FMC carries a level of risk. Overall, based on the Alpha FMC's adjusted beta (i.e. 1.139)<ref>Research shows that an investment has two main types of risks: 1) non-systematic and 2) systematic. Systematic risk is the risk related to the overall market, and non-systematic risk is the risk that's specific to an individual investment. Evidence shows that taking on non-systematic risk is inefficient, and it's, therefore, best to eliminate it; and in most cases, elimination is fairy easy to do [by holding a diversified portfolio of investments (i.e. around 15 investments)]. Accordingly, when assessing the riskiness of an investment, it’s best to look at the systematic risk only (i.e. ignore the non-systematic risk). A key measure of systematic risk is beta, and a main way to determine the riskiness of an investment is to compare the beta of the investment with the beta of the market, which is 1. For example, Supply@ME Capital's adjusted beta (5 years, monthly data) is 4.61, and is, accordingly, 561% above the market beta (of 1); assuming that a 'high' level of riskiness is 50% or more above the market beta, then the riskiness of investing in Supply@ME Captial is considered to be 'high' (561%>50%). For estimating an asset's beta, in terms of time period, and frequency of observations, the most common choice is five years of monthly data, yielding 60 observations. One study of U.S. stocks found support for five years of monthly data over alternatives. An argument can be made that the 2 years, weekly data can be especially appropriate in fast growing markets. The beta value in a future period has been found to be on average closer to the mean value of 1.0, the beta of an average-systematic-risk security, than to the value of the raw beta. Because valuation is forward looking, it is logical to adjust the raw beta so it more accurately predicts a future beta.</ref>, the degree of risk associated with an investment in Alpha FMC is 'medium'.		As with any investment, investing in Alpha FMC carries a level of risk. Overall, based on the Alpha FMC's adjusted beta (i.e. 1.139)<ref>Research shows that an investment has two main types of risks: 1) non-systematic and 2) systematic. Systematic risk is the risk related to the overall market, and non-systematic risk is the risk that's specific to an individual investment. Evidence shows that taking on non-systematic risk is inefficient, and it's, therefore, best to eliminate it; and in most cases, elimination is fairy easy to do [by holding a diversified portfolio of investments (i.e. around 15 investments)]. Accordingly, when assessing the riskiness of an investment, it’s best to look at the systematic risk only (i.e. ignore the non-systematic risk). A key measure of systematic risk is beta, and a main way to determine the riskiness of an investment is to compare the beta of the investment with the beta of the market, which is 1. For example, Supply@ME Capital's adjusted beta (5 years, monthly data) is 4.61, and is, accordingly, 561% above the market beta (of 1); assuming that a 'high' level of riskiness is 50% or more above the market beta, then the riskiness of investing in Supply@ME Captial is considered to be 'high' (561%>50%). For estimating an asset's beta, in terms of time period, and frequency of observations, the most common choice is five years of monthly data, yielding 60 observations. One study of U.S. stocks found support for five years of monthly data over alternatives. An argument can be made that the 2 years, weekly data can be especially appropriate in fast growing markets. The beta value in a future period has been found to be on average closer to the mean value of 1.0, the beta of an average-systematic-risk security, than to the value of the raw beta. Because valuation is forward looking, it is logical to adjust the raw beta so it more accurately predicts a future beta.</ref>, the degree of risk associated with an investment in Alpha FMC is 'medium'.

	Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. We note that the company in its current state was only really formed (following a reverse takeover) on 27th March 2020<ref>Officially, the company was formed on 1st March 2000 (i.e. almost 23 years ago).</ref>, and, therefore, the numbers of available data observations is less than what's typically used in the five years of monthly data beta calculation (i.e. 33 observations vs. 60 observations). The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more/most accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'medium' risk, it must have a beta value of between 0.5 and 1.5. Further information about the beta ratings can be found in the appendix section of this report.		Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more/most accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'medium' risk, it must have a beta value of between 0.5 and 1.5. Further information about the beta ratings can be found in the appendix section of this report.

	The key risks can be found below. For us, currently, the biggest risk to the valuation of the company relates to the company's ability (and willingness) to take the appropriate risk to maintain the growth of the business.		The key risks can be found below. For us, currently, the biggest risk to the valuation of the company relates to the company's ability (and willingness) to take the appropriate risk to maintain the growth of the business.

95.149.241.163 at 16:15, 1 February 2023

2023-02-01T16:15:51Z

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	=== What’s the size of the company target market? ===		=== What’s the size of the company target market? ===
	===Total Addressable Market===		===Total Addressable Market===
	Here, the total addressable market (TAM) is defined as the global consultancy market, and based on a number of assumptions, it is estimated that the size of the market as of today (23rd January 2023), in terms of revenue, is $~~590~~ billion<ref>0.61% ~~of global GDP~~.</ref>.		Here, the total addressable market (TAM) is defined as the global financial services consultancy market, and based on a number of assumptions, it is estimated that the size of the market as of today (23rd January 2023), in terms of revenue, is $46 billion<ref>Global financial markets consultancy market = World GDP x consultancy services as a proportion of World GDP x financial services as a proportion of World GDP

			= $100 trillion x 0.61% x 7.5%.

			= $458 billion.</ref>.
	===Serviceable Available Market===		===Serviceable Available Market===
	The serviceable available market (SAM) is defined as the global asset management, wealth management and insurance consultancy market, and based on a number of assumptions, it is estimated that the size of the market as of today (23rd January 2023), in terms of revenue, is $59 billion<ref>=10% of the global consultancy market.</ref>.		The serviceable available market (SAM) is defined as the global asset management, wealth management and insurance consultancy market, and based on a number of assumptions, it is estimated that the size of the market as of today (23rd January 2023), in terms of revenue, is $23 billion<ref>=50% of the global financial markets consultancy market.</ref>.

			===Serviceable Obtainable Market===
			Here, the serviceable obtainable market (SOM) is defined as the United Kingdom asset management, wealth management and insurance consultancy market, and based on a number of assumptions, it is estimated that the size of the market as of today (23rd January 2023), in terms of revenue, is $2.17 billion<ref>= UK GDP x consultancy as a proportion of GDP x financial services as a proportion of GDP

			= $3.131 trillion x 0.84% x 8.3%.</ref>.

	The key structural drivers in the industry are as follows:		The key structural drivers in the industry are as follows:
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	# The industry is subject to a wide range of regulatory and risk management considerations, which the directors believe will continue to drive growth in consulting services. In addition to the ever more demanding regulatory environment, the industry is having to react to requests from institutional and retail customers for greater transparency in reporting, engagement and accountability, which in turn is driving a growth in demand for more effective data systems and processes.		# The industry is subject to a wide range of regulatory and risk management considerations, which the directors believe will continue to drive growth in consulting services. In addition to the ever more demanding regulatory environment, the industry is having to react to requests from institutional and retail customers for greater transparency in reporting, engagement and accountability, which in turn is driving a growth in demand for more effective data systems and processes.
	# '''Consolidation.''' The pressure on margins within the asset and wealth management industry has also resulted in significant consolidation in recent years, as fund managers seek to increase assets under management, drive synergies and ultimately generate better returns through mergers and acquisitions. The value of global M&A deals completed in the sector totalled approximately $34.9 billion in 2015 and $71.3 billion in 2016, with many market commentators expecting continued consolidation through M&A in the asset and wealth management industry in the near future. This has created substantial opportunities and areas of growth for Alpha as it continues to provide M&A integration, operational and outsourcing consultancy services to increasingly larger and more complex fund managers.		# '''Consolidation.''' The pressure on margins within the asset and wealth management industry has also resulted in significant consolidation in recent years, as fund managers seek to increase assets under management, drive synergies and ultimately generate better returns through mergers and acquisitions. The value of global M&A deals completed in the sector totalled approximately $34.9 billion in 2015 and $71.3 billion in 2016, with many market commentators expecting continued consolidation through M&A in the asset and wealth management industry in the near future. This has created substantial opportunities and areas of growth for Alpha as it continues to provide M&A integration, operational and outsourcing consultancy services to increasingly larger and more complex fund managers.

	~~===Serviceable Obtainable Market===~~
	Here, the serviceable obtainable market (SOM) is defined as the United Kingdom asset management, wealth management and insurance consultancy market, and based on a number of assumptions, it is estimated that the size of the market as of today (23rd January 2023), in terms of revenue, is $2.17 billion<ref>= UK GDP x consultancy as a proportion of GDP x financial services as a proportion of GDP

	~~= $3.131 trillion x 0.84% x 8.3%.</ref>.~~

	=== What are the main achievements of the company? ===		=== What are the main achievements of the company? ===

95.149.241.163 at 14:42, 1 February 2023

2023-02-01T14:42:31Z

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	\|Year 1		\|Year 1
	\|Research suggests that when using the relative valuation approach, it's best to use a time period of 12 months or less. Accordingly, for the ~~sales~~ figure, we suggest using Year 1, which is 20 pence per share.		\|Research suggests that when using the relative valuation approach, it's best to use a time period of 12 months or less. Accordingly, for the earnings figure, we suggest using Year 1, which is 22 pence per share.
	\|-		\|-
	\|In regards to the PEG multiple, for the earnings growth figure, which year(s) do you want to use?		\|In regards to the PEG multiple, for the earnings growth figure, which year(s) do you want to use?
	\|Year 2 to 4, from now		\|Year 2 to 4, from now
	\|We suggest that for the ~~sales~~ growth figure, it's best to use Year 2 to 4, which equates to a compound annual growth rate (CAGR) of 30%.		\|We suggest that for the earnings growth figure, it's best to use Year 2 to 4, which equates to a compound annual growth rate (CAGR) of 30%.
	\|-		\|-
	\|In regards to the PEG multiple, what multiple figure do you want to use?		\|In regards to the PEG multiple, what multiple figure do you want to use?
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	\|-		\|-
	\|Which type of multiple do you want to use?		\|Which type of multiple do you want to use?
	\|~~Price~~/~~earnings to growth~~		\|Growth-adjusted EV/sales
	\|~~Mainly given~~ the ~~relatively low amount~~ of ~~fixed capital expenditure~~ (~~as a proportion~~ of revenue~~) of companies within~~ the ~~consultancy industry (for example~~, ~~currently~~, ~~Alpha~~'s ~~fixed capital expenditure as a proportion of revenue is around 0~~.~~5%)~~, we suggest valuing the company using the ~~price~~/~~earnings~~ ratio. However, we feel that to take into account the different business lifecycle stages of its peers ~~(and, therefore, the different growth stages of its peers)~~, the most suitable valuation multiple to use is the ~~price/earnings to~~ (~~earnings~~) growth multiple ~~(or the PEG multiple, for short)~~, rather than the ~~price/earnings multiple. Another multiple which we think it's worth looking at is the (sales) growth-adjusted~~ EV/sales~~, mainly because the~~ multiple takes into account the different leverage levels of the peers (whereas the PEG does not, at least not directly; one is able to argue that the leverage levels are reflected indirectly in the earnings growth rates).		\|For the numerator, we believe that to account for the different financial leverage levels of its peers, it's best to use enterprise value (EV), rather than price. For the denominator, we believe that because we expect Alpha FMC to reinvest almost all of its revenue back into the business over the five year forecast period and, therefore, its earnings are expected to be abnormally low over the period, it's best to use sales. Accordingly, we suggest valuing the company using the EV/sales ratio. However, we feel that to take into account the different business lifecycle stages of its peers, the most suitable valuation multiple to use is the (sales) growth-adjusted EV/sales multiple, rather than the EV/sales multiple.
	\|-		\|-
	\|In regards to the ~~PEG~~ multiple, for the ~~earnings~~ figure, which year to you want to use?		\|In regards to the growth-adjusted EV/sales multiple, for the sales figure, which year to you want to use?

	\|Year 1		\|Year 1
	\|Research suggests that when using the relative valuation approach, it's best to use a time period of 12 months or less. Accordingly, for the sales figure, we suggest using Year 1, which is 20 pence per share.		\|Research suggests that when using the relative valuation approach, it's best to use a time period of 12 months or less. Accordingly, for the sales figure, we suggest using Year 1, which is ccc pence per share.
	\|-		\|-
	\|In regards to the PEG multiple, for the earnings growth figure, which year(s) do you want to use?		\|In regards to the PEG multiple, for the earnings growth figure, which year(s) do you want to use?
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	\|-		\|-
	\|In regards to the PEG multiple, what multiple figure do you want to use?		\|In regards to the PEG multiple, what multiple figure do you want to use?
	\|1.~~04x~~		\|0.43x
	\|Here, we suggest using a multiple of 1.~~04x~~, which we believe is in-line with the multiples of Alpha's peers.		\|Here, we suggest using a multiple of 0.43x, which we believe is in-line with the multiples of Alpha's peers.
	\|-		\|-
	\|Which financial forecasts to use?		\|Which financial forecasts to use?

95.149.241.163 at 14:35, 1 February 2023

2023-02-01T14:35:10Z

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	\|}		\|}

			{\| class="wikitable"
			\|+Key inputs
			!Description
			!Value
			!Commentary
			\|-
			\|Which type of multiple do you want to use?
			\|Price/earnings to growth
			\|Mainly given the relatively low amount of fixed capital expenditure (as a proportion of revenue) of companies within the consultancy industry (for example, currently, Alpha's fixed capital expenditure as a proportion of revenue is around 0.5%), we suggest valuing the company using the price/earnings ratio. However, we feel that to take into account the different business lifecycle stages of its peers (and, therefore, the different growth stages of its peers), the most suitable valuation multiple to use is the price/earnings to (earnings) growth multiple (or the PEG multiple, for short), rather than the price/earnings multiple. Another multiple which we think it's worth looking at is the (sales) growth-adjusted EV/sales, mainly because the multiple takes into account the different leverage levels of the peers (whereas the PEG does not, at least not directly; one is able to argue that the leverage levels are reflected indirectly in the earnings growth rates).
			\|-
			\|In regards to the PEG multiple, for the earnings figure, which year to you want to use?

			\|Year 1
			\|Research suggests that when using the relative valuation approach, it's best to use a time period of 12 months or less. Accordingly, for the sales figure, we suggest using Year 1, which is 20 pence per share.
			\|-
			\|In regards to the PEG multiple, for the earnings growth figure, which year(s) do you want to use?
			\|Year 2 to 4, from now
			\|We suggest that for the sales growth figure, it's best to use Year 2 to 4, which equates to a compound annual growth rate (CAGR) of 30%.
			\|-
			\|In regards to the PEG multiple, what multiple figure do you want to use?
			\|1.04x
			\|Here, we suggest using a multiple of 1.04x, which we believe is in-line with the multiples of Alpha's peers.
			\|-
			\|Which financial forecasts to use?
			\|Proactive Investors
			\| The only available forecasts are the ones that are supplied by us (the forecasts can be found in the financials section of this report), so we suggest using those.
			\|-
			\|What's the current value of the company?
			\|$659 million
			\|As at 26th January 2023, the current value of the Alpha FMC company is $659 million (or £554 million).
			\|-
			\|Which time period do you want to use to estimate the expected return?
			\|Between now and one year time
			\|Research suggests that when using the relative valuation approach, it's best to estimate the expected return of the company between now and one year time.
			\|}

	{\| class="wikitable"		{\| class="wikitable"

95.149.241.163 at 14:31, 1 February 2023

2023-02-01T14:31:24Z

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	\|-		\|-
	\|Risk-free rate (%)		\|Risk-free rate (%)
	\|3.~~488~~%		\|3.591%
	\|Here, the risk free rate is the US 30 year treasury bond, and is calculated as at ~~16th December 2022~~. Research suggests that for the risk-free rate, it's best to use one that has the same or similar maturity to the estimated remaining lifespan of the company. Here, we have assumed that the estimated lifespan of the company is 50 years, so we have used the longest maturity, which is 30 years.		\|Here, the risk free rate is the US 30 year treasury bond, and is calculated as at 1st February 2023. Research suggests that for the risk-free rate, it's best to use one that has the same or similar maturity to the estimated remaining lifespan of the company. Here, we have assumed that the estimated lifespan of the company is 50 years, so we have used the longest maturity, which is 30 years.
	\|-		\|-
	\|Beta		\|Beta
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	\|-		\|-
	\|Equity risk premium (%)		\|Equity risk premium (%)
	\|5.26		\|7.98%
	\|~~Here, the equity risk premium is in relation to the global region, and is calculated as at 1st January 2022.~~ Research suggests that for the region of equity risk premium, it's best to use one that is the same or similar to the region of the beta market portfolio. Here, the region of the beta market portfolio is the world/global, so we have used the world/global region for the equity risk premium.		\|Research suggests that for the region of equity risk premium, it's best to use one that is the same or similar to the region of the beta market portfolio. Here, the region of the beta market portfolio is the world/global, so we have used the world/global region for the equity risk premium, and is calculated as at 5th January 2023.
	\|-		\|-
	\|Cost of equity (%)		\|Cost of equity (%)
	\|9.~~479~~%		\|12.68%
	\|Cost of equity = Risk-free rate + Beta x Equity risk premium.		\|Cost of equity = Risk-free rate + Beta x Equity risk premium.
	\|}		\|}

95.149.241.163: /* What are the assumptions used to estimate the return figure? */

2023-02-01T13:46:19Z

What are the assumptions used to estimate the return figure?

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	\|Which type of multiple do you want to use?		\|Which type of multiple do you want to use?
	\|Price/earnings to growth		\|Price/earnings to growth
	\|Mainly given the relatively low amount of fixed capital expenditure (as a proportion of revenue) of companies within the consultancy industry (for example, currently, Alpha's fixed capital expenditure as a proportion of revenue is around 0.5%), we suggest valuing the company using the price/earnings ratio. However, we feel that to take into account the different business lifecycle stages of its peers (and, therefore, the different growth stages of its peers), the most suitable valuation multiple to use is the price/earnings to (earnings) growth multiple (or the PEG multiple, for short), rather than the price/earnings multiple. Another multiple which we think it's worth looking at is the (~~revenue~~) growth-adjusted EV/sales, mainly because the multiple takes into account the different leverage levels of the peers (whereas the PEG does not, at least not directly; one is able to argue that the leverage levels are reflected indirectly in the earnings growth rates).		\|Mainly given the relatively low amount of fixed capital expenditure (as a proportion of revenue) of companies within the consultancy industry (for example, currently, Alpha's fixed capital expenditure as a proportion of revenue is around 0.5%), we suggest valuing the company using the price/earnings ratio. However, we feel that to take into account the different business lifecycle stages of its peers (and, therefore, the different growth stages of its peers), the most suitable valuation multiple to use is the price/earnings to (earnings) growth multiple (or the PEG multiple, for short), rather than the price/earnings multiple. Another multiple which we think it's worth looking at is the (sales) growth-adjusted EV/sales, mainly because the multiple takes into account the different leverage levels of the peers (whereas the PEG does not, at least not directly; one is able to argue that the leverage levels are reflected indirectly in the earnings growth rates).
	\|-		\|-
	\|In regards to the PEG multiple, for the earnings figure, which year to you want to use?		\|In regards to the PEG multiple, for the earnings figure, which year to you want to use?

95.149.241.163 at 09:12, 1 February 2023

2023-02-01T09:12:56Z

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	Asset Managers		Asset Managers

	The group has provided services to over 200 clients across the globe, including 17 of the 20 largest global asset managers by AUM and 60% of the top 50 as at 31 March ~~2017~~. In addition to traditional asset managers, Alpha also advises insurance-backed and pension-based businesses. The group’s clients cover the whole spectrum of institutional, intermediary and retail asset managers.		The group has provided services to over 200 clients across the globe, including all of the world's top 20 largest global asset managers by AUM and 80% of the top 50 as at 31 March 2022. In addition to traditional asset managers, Alpha also advises insurance-backed and pension-based businesses. The group’s clients cover the whole spectrum of institutional, intermediary and retail asset managers.

	Wealth Managers		Wealth Managers

155.198.14.213 at 13:45, 31 January 2023

2023-01-31T13:45:07Z

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	Alpha Financial Markets Consulting		Alpha Financial Markets Consulting

	The group provides advice to its clients in the asset ~~and~~ wealth management industry based on its sector experience and deep knowledge of the needs of specific industry participants. The group’s financial markets consulting proposition extends to working with clients across the four primary areas of:		The group provides advice to its clients in the asset, wealth management and insurance industry based on its sector experience and deep knowledge of the needs of specific industry participants. The group’s financial markets consulting proposition extends to working with clients across the four primary areas of:

	# Strategy and advisory		# Strategy and advisory
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	Projects classification		Projects classification

	Projects typically span multiple service lines and vary in size, duration and nature. The group principally prices its consulting services on a time and materials basis using daily charge out rates, but also uses fixed price contracts on occasions (typically in continental Europe). The group undertakes projects across most of the asset and wealth management value chain and these fall into three categories:		Projects typically span multiple service lines and vary in size, duration and nature. The group principally prices its consulting services on a time and materials basis using daily charge out rates, but also uses fixed price contracts on occasions (typically in continental Europe and North America). The group undertakes projects across most of the asset and wealth management value chain and these fall into three categories:

	* '''Major programmes:''' these typically span more than one financial year, are multi-geography and would be valued in excess of £2 million. There are usually 2 to 5 major programmes running in any year.		* '''Major programmes:''' these typically span more than one financial year, are multi-geography and would be valued in excess of £2 million. There are usually 2 to 5 major programmes running in any year.
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	=== What’s the size of the company target market? ===		=== What’s the size of the company target market? ===


	===Total Addressable Market===		===Total Addressable Market===
	Here, the total addressable market (TAM) is defined as the global consultancy market, and based on a number of assumptions, it is estimated that the size of the market as of today (23rd January 2023), in terms of revenue, is $590 billion<ref>0.61% of global GDP.</ref>.		Here, the total addressable market (TAM) is defined as the global consultancy market, and based on a number of assumptions, it is estimated that the size of the market as of today (23rd January 2023), in terms of revenue, is $590 billion<ref>0.61% of global GDP.</ref>.
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	The serviceable available market (SAM) is defined as the global asset management, wealth management and insurance consultancy market, and based on a number of assumptions, it is estimated that the size of the market as of today (23rd January 2023), in terms of revenue, is $59 billion<ref>=10% of the global consultancy market.</ref>.		The serviceable available market (SAM) is defined as the global asset management, wealth management and insurance consultancy market, and based on a number of assumptions, it is estimated that the size of the market as of today (23rd January 2023), in terms of revenue, is $59 billion<ref>=10% of the global consultancy market.</ref>.

			The key structural drivers in the industry are as follows:

			'''Cost pressures.''' As the pressures on the asset management sector continue to increase, Alpha offers asset managers offerings to improving efficiency, reducing costs and upgrading legacy systems. That's probably the most important structural driver for Alpha, since ongoing cost pressures force businesses to seek major operational improvements, including upgrading their systems, which plays directly into Alpha's strengths.

			'''Regulatory demand.''' Regulations are continually changing and evolving and new ones introduced and this is extremely challenging for businesses to cope with on their own. One recent regulatory development is the US SEC's plan to revamp the rules around fund names, which would require funds to prove that 80 per cent of their holdings match their names. The proposal would apply to everything from 'core' and 'growth' funds to funds that invest in 'sin stocks' or investments that meet 'ESG' criteria. According to a media report, the SEC has estimated the cost to the fund industry at up to US$5bn.

			'''Growth in assets under management.''' Global assets under management run by money and wealth managers grew by 12% to US$112trn over 2021, according to BCG. This growth rate was well above the 7% average for the previous twenty year period and was supported by higher than normal net flow rates at US$4.4trn or 4.4%.

	~~The asset~~ and wealth management industry has grown significantly since 2008, with global aggregate assets under management standing at approximately $69.1 trillion at the end of 2016, compared to $38.5 trillion at the end of 2008.		'''Client and societal expectations.''' This factor has been made apparent through the ascent of ESG (environmental, social and corporate governance) in recent years, which resulted in the establishment of a new business practice for Alpha.

	Whilst overall AUM is growing, the asset and wealth management industry is experiencing challenges stemming from regulatory changes and cost pressures from the regulators and end clients. These factors are driving an increased focus by asset and wealth managers on improving systems, data quality and operational processes, in order to gain a competitive advantage, generate above average returns and reduce costs. This ~~in turn~~ has ~~helped drive demand for the management consulting services provided to~~ the ~~asset and wealth management industry, across the spectrum~~ of ~~front~~, ~~middle~~ and ~~back office functions.~~

	~~The industry is subject to a wide range of regulatory and risk management considerations~~, which ~~the directors believe will continue to drive growth~~ in ~~consulting services. In addition to~~ the ever more demanding regulatory environment, the industry is having to react to requests from institutional and retail customers for greater transparency in reporting, engagement and accountability, which in turn is driving a ~~growth in demand~~ for ~~more effective data systems and processes.~~

	The pressure on margins within the asset and wealth management industry has also resulted in significant consolidation in recent years, as fund managers seek to increase assets under management, drive synergies and ultimately generate better returns through mergers and acquisitions (“M&A”).

	The value of global M&A deals completed in the sector totalled approximately $34.9 billion in 2015 and $71.3 billion in 2016, with many market commentators expecting continued consolidation through M&A in the asset and wealth management industry in the near future. This has created substantial opportunities and areas of growth for Alpha as it continues to provide M&A integration, operational and outsourcing consultancy services to increasingly larger and more complex fund managers.		#
			# '''Growth in assets under management.''' The asset and wealth management industry has grown significantly since 2008, with global aggregate assets under management standing at approximately $112 trillion at the end of 2021, compared to $38.5 trillion at the end of 2008.
			# '''Regulatory changes and cost pressures.''' Whilst overall AUM is growing, the asset and wealth management industry is experiencing challenges stemming from regulatory changes and cost pressures from the regulators and end clients. These factors are driving an increased focus by asset and wealth managers on improving systems, data quality and operational processes, in order to gain a competitive advantage, generate above average returns and reduce costs. This in turn has helped drive demand for the management consulting services provided to the asset and wealth management industry, across the spectrum of front, middle and back office functions.
			# The industry is subject to a wide range of regulatory and risk management considerations, which the directors believe will continue to drive growth in consulting services. In addition to the ever more demanding regulatory environment, the industry is having to react to requests from institutional and retail customers for greater transparency in reporting, engagement and accountability, which in turn is driving a growth in demand for more effective data systems and processes.
			# '''Consolidation.''' The pressure on margins within the asset and wealth management industry has also resulted in significant consolidation in recent years, as fund managers seek to increase assets under management, drive synergies and ultimately generate better returns through mergers and acquisitions. The value of global M&A deals completed in the sector totalled approximately $34.9 billion in 2015 and $71.3 billion in 2016, with many market commentators expecting continued consolidation through M&A in the asset and wealth management industry in the near future. This has created substantial opportunities and areas of growth for Alpha as it continues to provide M&A integration, operational and outsourcing consultancy services to increasingly larger and more complex fund managers.

	===Serviceable Obtainable Market===		===Serviceable Obtainable Market===

155.198.14.213 at 11:39, 31 January 2023

2023-01-31T11:39:02Z

← Older revision		Revision as of 12:39, 31 January 2023
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	== Summary ==		== Summary ==
	Quoted on the London Stock Exchange, Alpha Financial Markets Consulting (FMC) is a company that's on a mission to help businesses maximise/improve their profits. The company's flagship offering is the provision of consultancy/advisory services. What makes the consultancy offering unique is that it's provided by the largest team of financial market industry experts. Evidence suggests that the provision of consultancy services by the largest financial market industry experts team enables financial ~~market~~ companies to make better business decisions, ultimately leading the companies to maximise/improve their profits. The expected return of an investment in Alpha FMC over the next five years is ccc%, according to the estimates of Proactive Investors, which equates to an annual return of ccc%. In other words, an £100,000 investment in the company is expected to return £cc in five years time. The degree of risk associated with an investment in Alpha FMC is ~~<nowiki>'~~'medium'~~</nowiki>~~, with the shares having an adjusted beta that is 14% above the market (1.14 vs. 1). Assuming that a suitable return level over five years is 10% per year, then an investment in the company is considered to be a 'suitable' one.		Quoted on the London Stock Exchange, Alpha Financial Markets Consulting (FMC) is a company that's on a mission to help (financial markets/services?) businesses maximise/improve their profits. The company's flagship offering is the provision of consultancy/advisory services. What makes the consultancy offering unique is that it's provided by the largest team of financial market industry experts. Evidence suggests that the provision of consultancy services by the largest financial market industry experts team enables financial markets companies to make better business decisions, ultimately leading the companies to maximise/improve their profits. The expected return of an investment in Alpha FMC over the next five years is ccc%, according to the estimates of Proactive Investors, which equates to an annual return of ccc%. In other words, an £100,000 investment in the company is expected to return £cc in five years time. The degree of risk associated with an investment in Alpha FMC is 'medium', with the shares having an adjusted beta that is 14% above the market (1.14 vs. 1). Assuming that a suitable return level over five years is 10% per year, then an investment in the company is considered to be a 'suitable' one.

	=== Operations ===		=== Operations ===
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	=== Financials ===		=== Financials ===
	~~ccc~~		Strong financial performance and robust financial position.

	=== Risks ===		=== Risks ===
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	=== What's the mission of the company? ===		=== What's the mission of the company? ===

	~~The~~ mission of the company is to help businesses maximise their profits, in particular to provide the best (financial markets?) consultancy services.		Listed on the Alternative Investment Market (AIM) of the London Stock Exchange and headquartered in the United Kingdom, the mission of the company is to help businesses maximise their profits, in particular to provide the best (financial markets?) consultancy services.
	=== What's the company's main offering(s)? ===		=== What's the company's main offering(s)? ===

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	==== What's a key solution to the problem? ====		==== What's a key solution to the problem? ====
	The solution is the provision of consultancy/advisory services. What makes the consultancy offering unique is that it's provided by the largest team of financial ~~market~~ industry experts. Evidence suggests that the provision of consultancy services by the largest financial ~~market~~ industry experts team enables financial market companies to make better business decisions, ultimately leading the companies to maximise/improve their profits.		The solution is the provision of consultancy/advisory services. What makes the consultancy offering unique is that it's provided by the largest and most diverse team of financial markets industry experts, with 760 consultants operating from 16 offices across the United Kingdom, Europe, North America and Asia. Evidence suggests that the provision of consultancy services by the largest and most diverse financial markets industry experts team enables financial market companies to make better business decisions, ultimately leading the companies to maximise/improve their profits.

	Client service proposition		Client service proposition
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	Projects classification		Projects classification

	Projects typically span multiple service lines and vary in size, duration and nature. The group undertakes projects across most of the asset and wealth management value chain and these fall into three categories:		Projects typically span multiple service lines and vary in size, duration and nature. The group principally prices its consulting services on a time and materials basis using daily charge out rates, but also uses fixed price contracts on occasions (typically in continental Europe). The group undertakes projects across most of the asset and wealth management value chain and these fall into three categories:

	* Major programmes: these typically span more than one financial year, are multi-geography and would be valued in excess of £2 million. There are usually 2 to 5 major programmes running in any year.		* '''Major programmes:''' these typically span more than one financial year, are multi-geography and would be valued in excess of £2 million. There are usually 2 to 5 major programmes running in any year.
	* Large programmes: these are typically up to a year in duration, single or multi regions and valued between £1 million and £2 million. There are circa 10 large programmes undertaken in a year.		* '''Large programmes:''' these are typically up to a year in duration, single or multi regions and valued between £1 million and £2 million. There are circa 10 large programmes undertaken in a year.
	* Small programmes: these are typically single region, focused programmes valued at less than £1 million. There are usually more than 100 small programmes undertaken in a year.		* '''Small programmes:''' these are typically single region, focused programmes valued at less than £1 million. There are usually more than 100 small programmes undertaken in a year.
	* The group principally prices its consulting services on a time and materials basis using daily charge out rates, but also uses fixed price contracts on occasions (typically in continental Europe).

	Client segments		Client segments
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	Finally, Alpha supports a range of other providers to the asset and wealth management industry, including software vendors and data providers. Engagements with these clients include new product development, market reviews and support responding to market requests for proposal.		Finally, Alpha supports a range of other providers to the asset and wealth management industry, including software vendors and data providers. Engagements with these clients include new product development, market reviews and support responding to market requests for proposal.

			The people

			Alpha is a people business and the key to the group's success is its highly talented people with deep specialist knowledge. This very deep expertise enables Alpha to help its clients deal with complex operational and organisational challenges, and clients often struggle to find these strengths in the larger more generalist consulting businesses. Alpha is keen to attract the highest quality people in its fields of operation and the company's goal is to recruit the top 5% in the field.

			The group employs around 760 revenue-generating consultants (full-time equivalent basis), of which around 10% are contractors with the rest being fulltime staff. Full-time consultants receive a profit share in the form of a cash bonus. For a manager, this can reach 30% of the annual salary. In the case of the senior executive team, the cash payment is smaller, while equity options are awarded on annual basis, under the management incentive plan (MIP). The company anticipates an approximate 3% equity dilution over time (strictly a maximum of 10% over three years). Unvested awards granted under the MIP are limited to a maximum of 10% in aggregate of the company’s issued share capital. Vesting of the awards is linked to several factors, depending on the individual, including earnings per share growth, total shareholder return or specific business unit EBITDA.

	Key strengths of the group		Key strengths of the group
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	'''Strong balance sheet?'''		'''Strong balance sheet?'''






	=== Which are the main competitors of the product? ===		=== Which are the main competitors of the product? ===

	A key way to determine an offering’s closest competitors is by looking at other offerings that are targeting the same or similar target audience (i.e. financial markets companies) and providing or aiming to provide the same core benefit (i.e. more/maximum business profits, in particular financial markets consultancy), and then ranking the offerings in terms of the total amount of time spent using and/or money spent purchasing the offerings. With that said, we view that the closest competitor of the Alpha FMC offering(s) is Accenture. A detailed comparison between Alpha FMC and its main competitors are shown in the table below.		A key way to determine an offering’s closest competitors is by looking at other offerings that are targeting the same or similar target audience (i.e. financial markets/services companies) and providing or aiming to provide the same core benefit (i.e. more/maximum business profits, in particular financial markets/services consultancy), and then ranking the offerings in terms of the total amount of time spent using and/or money spent purchasing the offerings. With that said, we view that the closest competitor of the Alpha FMC offering(s) is Accenture. A detailed comparison between Alpha FMC and its main competitors are shown in the table below.


			Alpha operates in a competitive global market and competes with several organisations that offer services similar to those offered by the group. Competitors include the advisory practices of major accounting firms, global consulting firms and boutique consulting businesses.
	Alpha operates in a competitive global market and competes with several organisations that offer services similar to those offered by the group. Competitors include the advisory practices of major accounting firms, global consulting firms and boutique consulting businesses.

	The group has been able to successfully compete against these firms by providing specialist expertise to the asset and wealth management industry, and by consistently delivering a high quality service which attracts repeat business and fosters long term relationships. Against the boutique consulting businesses, Alpha is able to differentiate itself through its global offering, relationships with the largest fund managers and reputation for high quality and efficient service. Against the global consulting firms, the group differentiates itself with a specialised industry offering and tailored client solutions. Alpha is able to set itself apart from the advisory practices of major accounting firms through its specialist sector focus and by deploying highly experienced industry consultants to client engagements, who have demonstrable track records of delivering complex projects. This is made possible through the group’s ability to attract and retain high calibre consultants.		The group has been able to successfully compete against these firms by providing specialist expertise to the asset and wealth management industry, and by consistently delivering a high quality service which attracts repeat business and fosters long term relationships. Against the boutique consulting businesses, Alpha is able to differentiate itself through its global offering, relationships with the largest fund managers and reputation for high quality and efficient service. Against the global consulting firms, the group differentiates itself with a specialised industry offering and tailored client solutions. Alpha is able to set itself apart from the advisory practices of major accounting firms through its specialist sector focus and by deploying highly experienced industry consultants to client engagements, who have demonstrable track records of delivering complex projects. This is made possible through the group’s ability to attract and retain high calibre consultants.

	~~How does Alpha's fees compare to its peers? What's the financial markets team size of the peers?~~

	=== What is the main way that the company expects to make money? ===		=== What is the main way that the company expects to make money? ===
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	* It operates from 16 client-facing offices, across the United Kingdom, North America, Europe and APAC.		* It operates from 16 client-facing offices, across the United Kingdom, North America, Europe and APAC.
	* When the company IPO'd (in 2017), the company set as its next milestone to the double the size of the business (in terms of revenue?) within four years time, and the company achieved the milestone (a year earlier than the target date?). The company has since set a new milestone to double the business again within the same duration (i.e. four years), and it looks very likely that the goal will be achieved (expected FY23 revenue of £196.8 million vs. target revenue of £174.4 million).		* When the company IPO'd (in 2017), the company set as its next milestone to the double the size of the business (in terms of revenue?) within four years time, and the company achieved the milestone (a year earlier than the target date?). The company has since set a new milestone to double the business again within the same duration (i.e. four years), and it looks very likely that the goal will be achieved (expected FY23 revenue of £196.8 million vs. target revenue of £174.4 million).






	=== What's the business strategy of the company? ===		=== What's the business strategy of the company? ===
	The group’s strategy is to continue to grow in both existing and new jurisdictions. The group has a strong track record of EBITDA growth and intends to further grow its business in the following ways:		The group’s strategy is to continue to grow in both existing and new jurisdictions, both organically and through selective acquisitions, with a particular focus on North America. It also involves extending the depth and range of client segment and service line offerings. The group has a strong track record of EBITDA growth and intends to further grow its business in the following ways:

	'''Expand existing services in existing markets''' – The group currently serves clients in multiple countries and the directors consider that there is substantial scope to grow within these markets. In addition to winning new clients, the group also aims to grow by extending the services delivered to existing clients, or by serving other client group entities.		'''Expand existing services in existing markets''' – The group currently serves clients in multiple countries and the directors consider that there is substantial scope to grow within these markets. In addition to winning new clients, the group also aims to grow by extending the services delivered to existing clients, or by serving other client group entities.

155.198.14.213 at 10:56, 31 January 2023

2023-01-31T10:56:53Z

← Older revision		Revision as of 11:56, 31 January 2023
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	=== What's the mission of the company? ===		=== What's the mission of the company? ===

	The mission of the company is to help businesses maximise their profits, in particular to ~~be recognised as~~ the ~~leading global~~ consultancy ~~to the asset management, wealth management and insurance industries~~.		The mission of the company is to help businesses maximise their profits, in particular to provide the best (financial markets?) consultancy services.
	=== What's the company's main offering(s)? ===		=== What's the company's main offering(s)? ===