LSL has announced the acquisition of regulated mortgage and protection advisory network TenetLime for £12.9m, subject to Financial Conduct Authority (FCA) approval.

TenetLime operates a network providing services to 231 mortgage and protection advisers, operating within 133 appointed representative firms. Its advisers arranged around £3.9 billion of mortgages in 2022.

The network reported a pre-tax profit of £0.9m for the year to September 2022, when it had gross assets of £10.1m.

The transaction also includes consideration for the recruitment by TenetLime of 47 mortgage and protection advisers operating within 24 appointed representative firms, that are currently members of TenetConnect and TenetConnect Services, that are expected to transfer to TenetLime prior to completion.

The consideration payable is expected to be up to £12.9m consisting of an initial payment of up to £5.6m, calculated by reference to the number of appointed representative firms at completion and the turnover of these firms in 2022

There will be a further payment of up to £4.5m, calculated by reference to the number of appointed representative firms 12 months following completion and the turnover of these firms in 2022; and an expected payment of £2.8m for assets which form part of TenetLime’s regulatory capital.

The total consideration payable at completion is subject to adjustments based on the net asset value of TenetLime at that time.

The acquisition is being financed from LSL’s existing cash resources. At 30 June 2023, the Group had a net cash balance of £36.0m.

After a short period of transition, TenetLime members will be integrated fully in the operations of LSL’s PRIMIS Network. The acquisition allows LSL to leverage its existing network infrastructure to deliver synergies and enhance the Group’s margin.

David Stewart, group chief executive officer at LSL, commented: “I’m delighted we have been able to complete this transaction and I look forward to welcoming TenetLime’s advisers to our PRIMIS Network. The increase in membership will help us to further invest in our service offering to member firms as well as delivering scale economics to support further growth.

“The acquisition also underpins our leading position in the mortgage and protection network market and is fully aligned with our Group strategy to develop our Financial Services Network business.”