You should not believe everything that you read in the press (and certainly not everything that appears on social media).
Recently, one of the mid-sized accounting firms announced they had provided corporate finance advice on a transaction. This came as a surprise to us – and as news to the buyer. In reality, they had only provided behind the scenes tax advice. However, there is a serious point here; what you read about M&A in the press is normally true (if you discount the “merger made in heaven” bombast) but is only a somewhat partial truth.
By definition, it is only (typically) the successful M&A deals that are reported on. The setbacks, the legal hitches, the regulatory obstacles, the VAT issues and HMRC clearances, the share buybacks from 20 years ago that were not correctly documented, the EMI scheme that was not properly filed; the list goes on and on. All go unreported. Most can be resolved over time; occasionally they are fatal to the deal. And whilst one assumes these issues only relate to the seller, they can also impact the buyer, forcing them to withdraw. When Zurich withdrew its interest in a takeover of RSA in 2015 it was generally assumed the issues laid with RSA. As it turned out, the reasons for pulling out in fact lay with Zurich.
As sellers will typically only read in the press about transactions that have successfully concluded, they can convince themselves that their own sale will be simple. Towards the end of a process they often ask us “is every deal this difficult?”. To which the normal answer is that this one has been relatively straight forward!
The job of an adviser, amongst other things, is to guide their clients through what is typically a pretty testing process. Like the Mounties, we typically get our man deal in the end, but bringing our experience to bear when things do not go smoothly is a key part of what we do – just don’t expect to read about it in the press.
One often hears about businesses whose performance suffers after sale due to the inevitable distraction. This is invariably significantly greater for those who have chosen to advise themselves and can materially impact any earn-out.
We are always delighted to share our experiences of the good and the bad.
Insurance
The month of May saw a slight uptick in UK Insurance M&A activity, with ten new transactions to report on, nine of which were in the broking segment.
The largest announced transaction in the month was the much-trailed end to the long-running saga surrounding Lloyd’s broker Tysers, whose US private equity owner has been seeking an exit for some time. A suitor has finally been found, with the news that Australian AUB Group will acquire the business for a reported £500 million, with a back-to-back JV arrangement that will see fellow Australian PSC acquire a 50% stake in Tysers UK Retail business.
In commercial broking, Global Risk Partners demonstrated that it was business as usual following their recent announced takeover by Brown & Brown, with no fewer than four new acquisitions. The first of these was direct, with the acquisition of Durham-based Castle Insurance Services (North East). The others were made by three of GRP’s ‘hub’ brokers – County Group acquired Marsh and Co in Leicester, DCJ Group acquired SM Commercial Insurance Brokers in Chesterfield, and Marshall Woolridge acquired Bush & Associates in Huddersfield.
Among the other broking consolidators (although note that none of the consolidators actually like to be referred to as ‘consolidators’ any more …) Ardonagh announced the acquisition of PI specialist Alice Castle, Clear Group announced it had agreed to acquire London-based broker Centor Insurance & Risk Management, and James Hallam owner Seventeen Group added Torbay Insurance Services (TIS), building out its presence in the South West.
Lastly in broking, the recent run of broking M&A deals in Scotland continued, with Perth-based GS Group announcing it had acquired Strathtay Insurance Brokers in Dundee.
On the Insurance Services side of the market, specialist loss adjuster QuestGates announced it had completed the acquisition of structural engineering consultancy Structural Surveys in Warrington.
Finally, on the carrier side, in our March newsletter we reported that listed specialty insurer Randall & Quilter was to be acquired by Brickell Insurance Group in a £482m deal backed by US investment firm 777 Partners. In a twist to the tale, in May Brickell announced that it was pulling out of the agreement, citing a “material breach” by R&Q and sending its share price sharply downwards.
Investment
The investment sector saw continued M&A activity in May, predominantly driven by further consolidation within the wealth management and financial planning space.
Canaccord Genuity completed its purchase of Punter Southall Wealth in a £164m deal first announced in December. Canaccord’s private equity backer, HPS Investment Partners, will invest a further £65.3m into the business as the acquisition completes. Law firm Irwin Mitchell expanded its wealth management division with the acquisition of Cheshire-based TWP Wealth, adding £100m to its £1bn in assets under management. Schroders-backed Benchmark Capital acquired Derry-based Waterhouse Financial Planning, marking its first acquisition in Northern Ireland and its 27th overall. Benchmark will take on £120m in client assets, bringing its total client assets to £2.1bn. Kingswood made its fifth acquisition this year, buying Lincolnshire advice firm Vincent & Co for £421,000, adding £25m in client assets. AIM-listed wealth manager consolidator Team plc acquired Jersey-based financial planning and investment consultancy business Concentric, for an initial £1.7m in cash, plus a deferred consideration of £800,000 in new Team shares. Mattioli Woods-owned wealth manager Ludlow Wealth, acquired Glasgow-based wealth firm Ferguson Financial Management in a deal worth up to £1.2m. Brooks Macdonald bought Nuneaton-based adviser Integrity Wealth Solutions, adding £250m in AUM and Fairstone acquired Cumbria-based Financial Concepts, with more than £135m of AUM. Hybrid advice firm Aventur bought South Woodford-based JPSL Financial Services, adding £130m in AUM. Leicester-based Westerby Investment Management bought the client book of the independent financial advice company, Blythin & Brown Financial Solutions from Mountsorrel-based general business insurance broker Blythin & Brown Insurance Brokers.
Mid-market private equity investor Palatine announced a significant investment in the Doncaster-based retirement adviser, My Pension Expert, which has a team of 65, to help accelerate the company’s growth plans.
In the asset management space, Franklin Templeton bought the London-based international credit specialist Alcentra Asset Management from BNY Mellon. The deal will see the US asset manager absorb the company, which has $38bn (€35.4bn) in assets under management mainly in European credit and private debt, as well as senior secured loans, high yield bonds and private credit.
Pensions consolidator Chesnara completed its acquisition of insurance and long-term savings provider Sanlam Life & Pensions UK. The transaction was initially announced in September last year when Sanlam UK Limited said it would sell its life and pensions business for £39m, which covers approximately 80,000 policies and £2.9bn of assets under administration.
It was reported that Nucleus is in the process of selling its discretionary fund manager ‘Nucleus IMX’, which formally launched just a month before the advised platform was bought by James Hay with the help of private equity fund Epiris.
Lending
The largest transaction in May was the acquisition of Premium Credit, a provider of premium finance for commercial and retail insurance products and other specialist lending solutions, by private equity firm TowerBrook Capital Partners. The deal, which is expected to complete in the second half of the year, is reported to be worth over £600m.
In the challenger banking sector, neobank Kroo landed £26m in a Series B funding round and digital start up Recognise Bank secured a £8.7m capital raise from its existing shareholders to support continued business lending.
Growth capital funding start up Bloom Financial Group raised £300m in a Series A funding round led by Credo Capital Partners and Fortress Investment Group. London-based fintech consumer lender Creditspring secured £48m to expand its subscription lending business model.
Elsewhere, Pivotal Growth, a joint venture between Pollen Street Capital and LSL Property Services, agreed to acquire The Loan Partnership, a specialist second charge mortgage and bridging finance broker, for an undisclosed sum.
*IMAS Corporate Finance LLP has been acquired by MarshBerry.
