It is only now that I was thoroughly reviewing Gain Capital’s IPO prospectus that I noticed details the full details of the Gain Capital’s acquisition of CMS Forex’s retail business.
Gain Capital received $32 million client assets in this deal and paid $7.99 million immediately plus 15% of future net earning during the next 18 months.
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Nice deal for both brokers. This is also goes to show us how do brokers price acquisitions. I have to say that Gain Capital paid more than the industry average which is typically less (or even no) cash upfront and some net earnings sharing afterwards. The reason being is probably Gain’s IPO which came two months later and this deal helped Gain beef up its balance sheet as it paid $8 million cash to receive $32 million in client assets.