Matt Sackett, of DOXA Insurance, Talks About Their Founding and Growth

Video Transcription

George Bucur: Hello, my name is George Bucur. I’m a director within MarshBerry’s financial advisory practice. Leading our specialty practice group, we oftentimes have interviews with those buyers in the marketplace that are influencing the way that business is done. Today, we are joined by Matt Sackett, CEO of DOXA Insurance. Matt, good to be here today with you.

Matt Sackett: George, thanks for having me.

Bucur: Excellent. As a little background, Matt and DOXA started roughly six years ago and have made very significant strides in growth making around 85 million of net revenue at this point in time. They’ve done it through both inorganic and organic means. Matt, maybe you could talk a little bit more about your experiences in that six-year window in terms of how DOXA was started and what has allowed you to get to the very impressive revenue amount that I just stated.

Sackett: Well, George, first you’re always selling me short, it’s 91 million in revenue not 85 million. I appreciate that, but–

Bucur:  That’s some very good growth.

Sackett: You blink and all of a sudden, we’re bigger. So, thanks again for having me today. You know, when DOXA launched in 2016 we basically –my business partner, Tim, and I– had a thick business plan that we thought was pretty well-vetted, and obviously no private equity for instance was going to back a company without a track record, without a pipeline, and without really anything but a well-vetted dream. So, we went here locally to “friends and family money,” would be the term, I mean it was a little bit deeper than that. We had a mutual insurance company. We had a lot of family trust and then a lot of wealthy individuals. That’s what really provided the capital for DOXA’s first three raises and got us through about three acquisitions. And then –actually, it was four acquisitions at that point– that goes to the EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) figure where we were more attractive to the equity world. They really came to us. You know, I have to say, I’m not really sure we ever envisioned that within DOXA’s history, that we would be working with equity firm. But, it was December of 2021– I’m sorry December of 2020, excuse me all the dates time’s going too fast– that we did have Century Equity Partners come in and buy a slow majority of DOXA. It provided great rate of return for our shareholders, and they’ve been a fantastic partner. They understand the insurance space, number one. And number two, you know, the things that we were missing with our previous structure were from an administrative standpoint. Dealing with all those investors required a lot of paperwork and a lot of time. Great people, but there was a lot of information that they were curious about and wanted to have so that was disruptive. The second thing was we did not have a standing debt facility until Century came on board, so with every deal we had to trot off to the bank with the paperwork. And our banking partner was Oak Street at that point. Again, without Oak Street, DOXA would not be here. They were very great to work with, but it was an additional administrative burden versus having that standing debt facility. And having the equity backing and the debt facility, it has really enabled DOXA to expand our acquisition appetite. So, initially DOXA was in the business of acquiring medium to small managing general agents. We expanded that to the second vertical which was niche focused wholesale brokerages. And then as of last December– last October, excuse me– we added an affinity vertical. Again, all with the idea of sort of having self-ballasting revenue streams during various economic cycles. But now we’re chasing deals that are anywhere from you know a million and a half to 10 million plus in EBITDA, and really having that equity partner enables us to do that.

Bucur: Excellent. Yeah, it is quite a very impressive story. Now, Matt, part of my understanding of DOXA is that you offer what the seller needs and that varies by firm. And just to elaborate that in maybe a little more detail is if a seller maybe needs help with markets, you can do that, if they so choose. If a seller has needs around back-office support, those are services that you provide as well. As you think through that, there’s going to be various attributes that are either more or less attractive to you and DOXA with each of those respective counterparties that you’re talking with. Can you go into a little more detail when you’re looking at a potential partner, when you’re looking at a potential seller, what are some of those attributes or characteristics that you find valuable and how do you assess that in your mind?

Sackett: You know, I would say that the two key characteristics are first good business, and by good business I mean a track record of success. Weathering a few storms that they can talk about clearly and articulate, you know, because you have storms in every business. You need to weather, and how they weathered the storms kind of points towards the leadership. We really like transparent people who will fight for what’s best for the business, and (we) find that we get very aligned, very quickly with individuals with that mindset. So, you know longevity, good leadership, and really kind of approach the marketplace with a position of strength. They run their operation to make it grow and to make it successful. They don’t run their operation to keep it from failing. We’ve noticed that’s a huge departure in mindset between one seller and the other when we buy a business, so we really look for that key characteristic when making an acquisition. The other thing is, you know, when I had part of the DNA of DOXA from my side my business partner, Tim, obviously provided a tremendous amount from the back offices. When I had a small MGA (managing general agent), I started from the ground up and sold to Aon. And one of the reasons I sold Aon at the time that I did was it was 50% of business was great  –dealing with the new products, new programs, cutting deals with insureds and agents and brokers and growing the business which was fun, dealing with the server crashing, people being out sick, the benefit plan renewal, cutting checks on the weekend– all that stuff was just maddening. And really, the whole, I guess, premise for DOXA with regard to back office is where can we help you. We don’t need to force you onto our IT platform or system. We don’t need to take over your accounting, unless you need help there. We don’t want to disrupt what is already working, but there are areas where we can make investments with the deeper pockets to help your business grow. We have a standing DOXA sales team that learns the products and is out in the field with distribution resources that has helped us drive organic growth every year, which has been fantastic. We’re really into sales and marketing. We have a marketing team here that we spend a lot of money on to keep our brands out in the marketplace. And for a lot of people, when you’re an owner, it’s like taking money out of your pocket to do that. So, you can use our money to do things like that: help the business grow, (handle) surplus lines tax, IT, licensing. We have the capabilities to do all of that internally if it’s not going to disrupt you facing outwardly to grow your business.

Bucur: Excellent. There’s the phrase in real estate that I think everyone knows about is, you know –location, location, location. In this case, what I’m hearing from you is –management, management, management– and I think that really can resonate with a relationship-based industry that we are operating in today. Matt, it’s been extremely impressive watching DOXA grow over the last just very short six years. We continue to encourage and looking forward to seeing the updates in regards to that very quickly revenue growth trend that you referred to earlier, and frankly we wish you a lot of luck in those large acquisitions in your pipeline today. So, on behalf of MarshBerry and the viewers, thank you very much. And to our viewers, I appreciate your time and we will be in touch. Until we talk again, be well.

Sackett: Thank you, George.