Luminar: Bumbling Amateurs or Elaborate Con?

My experience with Luminar must be something akin to a soccer “mom”, who sets out with excitement and pride, rooting from the sidelines, only to find her little darling is not only no bloody good at the game, but resorts to the foulest of tactics in order to keep others from realising the fact.

Billed arrogantly as “one of the world’s leading investment companies”, Luxembourg-domiciled Luminar claims a “unique” means of acquiring businesses.  Allegedly underpinned with an “insurance” product that safeguards any deferred consideration (AKA the money the seller waits for after the deal has been done), Luminar positions itself as a cut above any other acquiring party.

Shockingly, the truth is far more sinister.  The “insurance” product – if it even exists anymore – can only be used in the most watertight deals.  Even then, it is far from guaranteed that it will pay out if required.  We are aware of at least one such deal dating back to 2008 where the former owner is still fighting for their insurance money. 

The “unique” acquisition method appears to comprise little more than a combination of lending secured against the assets of the acquired company and deferred consideration.  Who takes the majority of the financial risk?  The seller.  Who takes no financial risk whatsoever?  Luminar.

Combine this with the franchise model – a particular favourite of the Luminar shareholders – and we can begin to see the sheer extent of the deception.  Franchisees are persuaded – by Ian David Johnson in the UK or James Russell Lowrie in Australia – to part with a £100,000 licence fee and commit to a 5-year term paying additional fees of £3,000 per month.  That is a total financial commitment of £280,000. 

With the shakiest of “training” under their belt, they are then expected to find, negotiate and conclude business acquisitions, on the understanding that they will enjoy an equity stake in the acquired companies.

In its 4 years of operation, not a single deal has been concluded.  Of the 14 or so franchisees that joined, just two remain – and many of those who have left have lost six-figure sums.

Who has gained financially?  The Luminar shareholders of course – Ian David Johnson, James Russell Lowrie and Stephen Gordon Greenwood.

So, bumbling amateurs or elaborate con? There is simply no contest.