Netwealth Group (NWL) M&A announcement summary

Deal rationale and strategic fit

• Acquisition addresses adviser capacity constraints in Australia by automating advice workflows and expanding support beyond administration to advice production and client onboarding.

• Paradino's technology expands workflow coverage from 10% to 50% of adviser time, enhancing productivity and business growth.

• The deal aligns with strategic goals to boost adviser productivity, differentiate the platform, and strengthen AI and data capabilities.

• Paradino is hyper-localized for the Australian market, providing a competitive advantage and proven adoption.

• The acquisition is seen as a watershed moment, combining AI productivity tools with a wealth management platform for the first time in Australia.

Financial terms and conditions

• Upfront payment of AUD 15 million in cash and AUD 5 million in shares, with shares escrowed and released over four years.

• Up to AUD 9 million in earn-out and retention payments over four years, based on integration and performance milestones.

• Maximum consideration totals AUD 29 million if all earnout conditions are met.

• Additional AUD 10 million investment over two years to accelerate Paradino's roadmap and integration.

• Paradino is early-stage, not yet break-even, and is expected to deliver an EBITDA loss of AUD 3 million in FY27.

Synergies and expected cost savings

• Integration is expected to increase adviser productivity by 38%, reducing workflow time from 33 to 24 hours and saving over 9 hours per week.

• Advisers could increase client capacity from 120 to over 165 and FUA from AUD 87 million to AUD 120 million.

• Adviser fee generation could rise from AUD 560,000 to nearly AUD 800,000 per year, with a payback period of less than one month.

• Paradino's AI tools can reduce SOA production time from 8.8 hours to under 10 minutes.

• Efficiency gains enable servicing more clients and growing funds under administration without extra acquisition costs.