Acquirers put a lot of effort in trying to do deals with unadvised sellers. They readily admit to us that this is driven by the desire to pay less for any given asset. Many acquirers are private equity backed and will themselves be sold. The less they pay, the more money the executives will make on their own exit. A powerful incentive.
But in the next breath they will say having an adviser makes the whole process so much easier.
Of course no deal is actually unadvised. Every transaction has two sets of lawyers.
On a transaction we recently completed, our lawyer said to us that earn-outs never paid out and went on to give an example in the Tech sector which they had recently been involved in. They had also expressed this view to our client who then discounted this important element of value.
But financial services is a people-based industry. Our experience is quite different. Earn-outs do pay out. Earn-outs reduce the risk to buyers, allowing them to pay more for a business. Indeed, during Covid we saw some earn-outs being extended so as not to adversely impact the success of the deals.
Advice is only valuable if it is relevant. If not, it can be damaging. Arguing the wrong points increases the stress, duration of negotiations and inevitable distraction.
So not only do unadvised sellers get a lower headline number, the distraction over a prolonged period can have a detrimental impact on the trading of the business post completion and impact the earn-out.
Whether you are thinking of selling now or in five years’ time, we can provide you with advice based on our unmatched knowledge of acting for vendors across the general insurance and investment sectors.
Insurance
2023 got off to a lively start in terms of announced UK Insurance M&A with fourteen new sector deals to report on during January.
As always, the majority of new deal activity was in the commercial broking segment, with acquirers including several of the ‘usual suspects’ and a number of smaller private buyers.
Among the regular buyers, J.M. Glendinning announced two new acquisitions, adding Knightsure Insurance Brokers in Southampton and Alexander Insurance Brokers in Bo’ness (West Lothian). Global Risk Partners made a further acquisition in Wales, adding BPW Insurance Services in Newport. Jensten Group announced it had acquired Coversure Kidderminster. US group Acrisure made yet another acquisition with Affinity Brokers in Glasgow. Finally, Inflexion-backed DR&P Group added Lloyd Bolam Insurance Brokers, a Brokerbility member based in Macclesfield.
Away from the more frequent PE-backed buyers, Movo Partnership announced that it had added CCS Insurance Services in Woking, and Hayes Parsons Group acquired Bristol-based PI specialist Ntegrity Insurance Solutions.
In the Lloyd’s segment, Amwins Global Risks announced that it had acquired Roberts Armytage & Partners, a Lloyd’s broker with a particular focus on energy and marine business, and BLW Insurance Brokers announced that it had acquired a retail scheme – Security Industries Specialist Services – from Crispin Speers & Partners.
There were two new deals involving MGA businesses, with Mercia Underwriting (part of the Circle Group) acquiring personal marine specialist Nautical Insurance Services, and Global Risk Partners adding Nucleus Underwriting, a specialist provider to the lifesciences sector that will become part of GRP’s Camberford Underwriting brand.
Finally, in personal lines, a Companies House notification showed that Pet Protect Group, formerly part of Fairfax Financial, the Canadian group that also owns Brit Insurance, has now become part of Cardif Pinnacle, the insurance arm of French bank BNP Paribas.
Investment
The start of 2023 ignited a spark of M&A activity in the Investment sector with several notable deals announced in January, including Nucleus’s £242m public takeover of Sipp provider, Curtis Banks, in a deal that is set to further advance Nucleus’s strategy of creating a leading adviser platform.
This month also saw several firms continuing to expand both their AUA/M and footprint with M&A. South Tyneside-based wealth manager Fairstone expanded its geographic footprint by acquiring Surrey-based Mantle Financial Planning, a specialist in financial planning for HNW individuals, adding more than £450m in AUM. Radiant added an additional £300m in AUA with the acquisition of Doncaster-based Ethos Financial Solutions, taking its total AUA to £1.6bn, representing its first acquisition in Yorkshire. PE-backed Skerritts announced that it had expanded its presence and its AUM with the purchase of Kent-based IFA Equinox Wealth. Titan Wealth announced it had furthered its presence in the Midlands after it reached a deal to acquire Telford Mann Group, an IFA with £750m in AUA and £700m in AUM. HFMC Wealth completed the acquisition of R&S Financial Planning, retaining R&S’s client-facing staff, and adding £145m in AUA. Wirral-based and founder-led financial planning firm, Gavin Tansey Financial Services Limited, was acquired by Evelyn Partners in their eighth deal of the same nature since Q4 2021. National IFA Wren Sterling Group announced that it had acquired Morfitt & Turnbull, adding a further £270m of client assets.
Both Perspective and Kingswood had strong appetite for M&A throughout 2022, with each completing twelve deals during the year and neither slowing down with the start of 2023. Perspective continued its strong acquisitive streak with the addition of Bucks-based Ian J Hunt Chartered Financial Planners, increasing AUM by £37m. Further to its December announcement, AIM-traded Kingswood completed the acquisition of Newbury-based Barry Fleming & Partners, increasing its total AUA to over £11.3bn.
Elsewhere in the sector, ICG-backed With Intelligence announced it had acquired London-based data analytics firm CAMRADATA from Punter Southall Group. It was also reported that Canaccord Genuity Group’s senior management team had launched a £700m buyout for the Canadian financial services firm, with the takeover headed by CEO Daniel Daviau with plans to take the firm private. London-based Alvarium Investments announced that it had completed its merger with Tiedemann Group, the NY-based multi-family office.
*IMAS Corporate Finance LLP has been acquired by MarshBerry.
