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Alpha Financial Markets Consulting plc
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=== What's the company's main offering(s)? === ==== Who’s the target audience of the company’s flagship/first product? ==== The audience is companies that operate in the asset management, wealth management and insurance industries. ==== What's a major problem that the target audience experience? ==== A lack of profits/growth. ==== 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 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 The group’s client proposition can be broadly categorised into three areas: Alpha Financial Markets Consulting, Alpha Technology Services and Alpha Data Solutions. Alpha Financial Markets Consulting 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 # Evaluation and selection # Implementation and execution # Benchmarking In each case, these services are delivered across the value chain, which comprises: # Portfolio optimisation # Order management # Pre-trade and post-trade compliance # Sales, marketing and distribution operating model design # Client relationship management and engagement # Regulatory and investment guidance change and other risk management # Middle and back office outsourcing selection # Client reporting # Trade and corporate action processing # Fund and portfolio accounting # Custody services Strategy and Advisory The group provides its clients with insight into market trends, new products, the regulatory agenda and competitive threats and opportunities. The advice that the group provides allows its clients to make decisions on managing their business and connecting with the market. The group’s consultants are industry specialists, and as part of a global team, are able to provide an international perspective for their clients, giving insight across the value chain. Evaluation and Selection The group provides independent and impartial advice to its clients on the choice of technology solutions, outsourcing providers and other partners for their businesses. Using its current knowledge of the market and proprietary benchmarking data, the group is able to provide an up-to-date view of provider capabilities and the best solutions for the specific needs of its clients. The group’s impartial position also enables it to conduct commercial negotiations on behalf of clients and build relationships between these clients and their providers. Implementation and Execution For the implementation and execution of complex projects, the group provides clients with professional teams who have specialist hands-on expertise in delivering complex and time critical projects. These projects span the spectrum of front, middle and back office functions. Benchmarking The group has developed an extensive library of data and analysis on the asset and wealth management industry, providing benchmarking analysis on comparable costs, operational performance, key performance Indicators and other metrics. This library of benchmarking data is proprietary to the group. Clients are able to benchmark their operational capability and cost profile against other asset managers; if the operational activity is outsourced, they can compare capability and cost profiles against the services provided by third party administrators to other outsourced asset managers. The studies benchmark core comparison metrics and include: * Tariff and rate cards; * Key performance indicators and service performance; * Service level agreements; and * Commercial contract items. Alpha Technology Services Through Alpha Technology Services, the group delivers specialist technical expertise to clients in two key areas: Project Delivery The group’s specialists include developers or configurators with deep expertise in a particular software platform or range of platforms. Ongoing Support Following the implementation of a software platform (for example, the Salesforce.com Client Relationship Management tool), Alpha Technology Services supports clients with the ongoing maintenance, improvement and configuration of the platform. This is typically contracted on an annual basis, providing clients with access to a set number of days of support per week or month, and Alpha with an annuity revenue stream. Currently, Alpha Technology Services is predominantly focused on servicing the distribution part of the asset and wealth management value chain, but demand is already emerging in other areas, and the group’s strategy is to address the growing area of demand by broadening its technical capabilities accordingly. Alpha Data Solutions Following the acquisition of TrackTwo GmbH in July 2017, the company’s new division, Alpha Data Solutions, provides a specialist data offering to asset managers. This data offering, 360 SalesVista, enables asset managers to match client transactions and AUM to create a golden source for client data. This improved visibility and accuracy of customer flows can be used by asset managers to deliver improved business outcomes across distribution, finance and compliance. Project portfolio overview 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 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. * '''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. Client segments The group identifies challenges to and provides offerings for a range of clients, including: 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 Alpha works with wealth managers delivering private banking and wealth solutions, discretionary fund management and family office services to end clients. The services provided to these organisations mirror those delivered to traditional asset managers. Third Party Administrators The group works with the majority of the largest third party administrators, organisations that provide outsourced middle and back office services to the asset and wealth management industry. Alpha supports these organisations with a wide range of services, including sales effectiveness consulting, deal management and target operating model design and implementation. Alternative Investment Managers Alpha supports a range of clients in the alternative investment space, including private equity houses, alternative fund managers, and traditional asset managers with alternative investment strategies (such as real estate, private equity or other illiquid investments). The services provided to these organisations mirror those delivered to the traditional asset managers. Other Providers 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 As a leading global consultancy provider to the asset and wealth management industry, the directors believe that Alpha is well-positioned for continued growth in a marketplace shaped by the primary market drivers of an underlying growth in AUM, rising cost pressures, regulatory change and continuing consolidation, all of which are underpinned by technological change in the asset and wealth management industry. The group’s approach is to create value for clients by leveraging its extensive industry knowledge, proprietary database, product expertise and application of technology and digital innovation to deliver a targeted service offering across most of the asset and wealth management value chain from portfolio management through sales, distribution and the middle and back office. This approach allows the group to help its clients improve key aspects of their business. The directors believe that Alpha’s strategy, together with the following competitive strengths, distinguish it from its competitors in this marketplace. '''Focused industry proposition delivering true expertise''' – Alpha has developed specialised expertise and experience in the asset and wealth management industry. This industry focus enables the group’s professionals to provide offerings on a global basis with a comprehensive understanding of the market, business issues and relevant technologies, and ultimately deliver tailored solutions for each client. '''Strong reputation and deep relationships with global clients''' – Alpha has served a large proportion of the world’s largest and most successful asset managers and wealth management companies, 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. '''Broad, diversified and expanding base of clients''' – The group’s business extends to delivering a range of product offerings to global asset managers, wealth managers, asset owners and third party administrators. Revenue is diversified across a growing client base with no single client accounting for more than 10% in the year ended 31 March 2022. '''Intellectual property''' – The group combines industry leading consulting expertise with detailed proprietary benchmarking data developed since the creation of the group, which has enabled it to develop trusted, long term relationships with clients. This information is held by the company, preventing the company from becoming dependent on one particular individual or group of individuals. '''Alpha’s people and culture''' – The group competes with the largest consultancy companies globally for talent, operating a business in which people are central to the delivery of its growth strategy. Alpha targets both graduates and experienced professionals and has developed a strong culture which attracts high calibre consultants and places people at the heart of the business. Further, Alpha has created an environment in which people are rewarded for both their own contribution and for the success of the business as a whole. The directors believe that Alpha’s reputation is key to attracting those talents. To develop and support high performance, the directors believe that the group has developed a rigorous recruitment process and comprehensive training and development plan, offers a market leading compensation package including profit share arrangements, and has a strong focus on employee wellbeing. This results in Alpha having attained what the directors believe to be an industry leading unmanaged consultant attrition rate of less than 5% in the year ended 31 March 2022. '''Strong track record of organic growth''' – Alpha has delivered a consistent record of growth with a revenue CAGR of 33% from £6.71 million for the year ended 31 March 2011 to £158.0 million for the year ended 31 March 2022. This significant revenue growth has been accompanied by a CAGR in adjusted EBITDA<ref>Note, the main adjusting items are: 1) share-based payments charge, 2) amortisation of acquired intangible assets, 3) earn-out and deferred consideration, 4) foreign exchange gains and losses, 5) acquisition costs and 6) loss on the disposal of fixed assets.</ref> of 40% over the same period, reaching £33,87 million for the year ended 31 March 2022. '''Proven, experienced high-calibre management team''' – The group benefits from a high-calibre senior management team with substantial and diverse experience, led by Euan Fraser, the group’s Chief Executive Officer. Together, the senior management team has driven the growth and strong financial performance of the business over the past several years and has a proven track record of delivering results. Building on the significant growth already achieved in recent years, the directors believe that the group has the potential to capture a significantly larger market share of its chosen markets. The directors believe that the competitive advantages as described above position the group to deliver profitable growth. '''Strong balance sheet?'''
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