Since January 2021 more than half of all announced transactions in the UK in the general insurance and investment sectors with a value between \u00a35m and \u00a325m have been done on an unadvised basis.<\/p>\n\n\n\n
Buyers devote considerable effort in trying to secure off-market (i.e. unadvised) deals although they will readily admit that such processes typically take longer and are more difficult for both sides, whilst leaving money on table, they can get bogged down in the detail and often be aided and abetted by their own lawyers.<\/p>\n\n\n\n
So why the effort and extra grief? Simply put, unadvised transactions are cheaper for the buyer, as competitive tension is absent.<\/p>\n\n\n\n
The very thing we look to create is competitive tension. We do this by ensuring our client is well prepared and only engaging with those potential buyers who have both a heathy appetite and a cheque book commensurate to the task in hand.<\/p>\n\n\n\n
One weapon in the arsenal of a buyer seeking out unadvised targets is the somewhat innocent sounding \u201cmutual NDA\u201d. In signing this document an owner considering a sale typically agrees not to engage with any other party for an extended period whilst handing over far more information than is necessary to the author of the NDA.<\/p>\n\n\n\n
We have been talking to one particular client for over a year, about when it will be the right time to sell in terms of his personal objectives, about likely values, about how long any earn-out will be, the basis of calculation, and so forth. Getting ready to engage with potential buyers.<\/p>\n\n\n\n
Last week a \u201cmate\u201d of the business owner helped him set up a meeting with a serial buyer and the following day he was (predictably) being pressed to sign an NDA, with absolutely no sense of what the deal on the table might be.<\/p>\n\n\n\n
Signing NDAs is a normal part of commercial life. When we engage with prospective buyers on behalf of a client, we ensure non-disclosure undertakings are given by the buyer and include very specific protections for the seller, not vice versa, as the buyer will not be the one disclosing details of their clients or top producers.<\/p>\n\n\n\n
We would only ever suggest a seller grant a buyer exclusivity at the end of detailed pricing negotiations when the shape and value of the deal is clear, not at the start.<\/p>\n\n\n\n
Taking advice puts you in control, ensuring you are positioned to achieve the best deal \u2013 and this is about more than just a headline price. You only sell once, it is important to get it right.<\/p>\n\n\n\n
Insurance<\/strong><\/p>\n\n\n\n July has seen a modest slowdown of UK Insurance M&A activity, with only 9 new deals to report on this month, but deal volumes continue to be at near record levels.<\/p>\n\n\n\n As readers of our annual review documents will know, for some time IMAS has been reporting on the near drying up of new direct and primary investments into the insurance distribution sector by private equity, with only two such transactions during the whole of 2022. Well, like London buses, in July we saw two such investments announced within days of each other. In the first, mid-market PE firm Blixt Group announced that it had invested in Academy Insurance Services, working alongside a new management team with previous experience at Swinton. In the second, fast-growing MGA Carbon Underwriting announced that it had received new investment from Apiary Capital.<\/p>\n\n\n\n The Carbon deal was one of no less than four new MGA deals announced during July, where the M&A market remains very active (there have been 16 MGA deals so far in 2023, versus only 13 during the whole of 2022). Two of those deals involved Clear Group, which announced the acquisition of both PI specialist One Commercial Specialty from BSpoke Group, and a few days later, a deal for Profile Risk Solutions, which trades as Profile Underwriting. In the fourth MGA deal, NBS Underwriting announced it had acquired Capital Markets Underwriting, or CMU.<\/p>\n\n\n\n There was the usual clutch of new commercial broking deals in the month, with serial buyers Global Risk Partners (via its Greens hub business) announcing a deal for Petherwick Insurance Brokers in Sussex, and Ardonagh continuing its recent run of new UK deals with AMS Insurance Solutions in Somerset. At the smaller end, Stevenson Seacombe Partnership announced that it had acquired a 51% interest in fellow TBIG member Whitefield Insurance Services.<\/p>\n\n\n\n Amongst carriers it was announced that German legal expenses specialist ARAG will acquire the UK business of competitor DAS Legal Expenses.<\/p>\n\n\n\n At 31 July on a YTD basis there had been 90 announced insurance distribution M&A deals in the year, versus only 63 in the corresponding period in 2022. Activity is tracking close to the record set in 2021, when 95 transactions were announced in the first 7 months of the year.<\/p>\n\n\n\n What transaction volumes disguise however, is the reducing size of the deals being done, as supply-side constraints force the mainstream consolidators into targeting smaller and smaller deals. The average and median headcount of acquired businesses in the 90 announced deals in 2023 (YTD) is 28 and 13 respectively. In the 95 deals announced in the same period in 2021 the mean and median headcount across all targets was 77 and 18, respectively.<\/p>\n\n\n\n Investment<\/strong><\/p>\n\n\n\n July included a number of transactions involving public companies in the investment sector. First came the announcement of a \u00a3500m investment by Chetwood Financial in LendInvest, the mortgage platform provider. Then STM Group, the international administrator of wealth assets, announced that they had reached an agreement in principle on the key terms of a possible \u00a344m cash offer from Pension SuperFund Capital. And finally, asset manager Gresham House, which manages \u00a38bn of assets, announced it had agreed a \u00a3470m takeover offer from US private equity firm Searchlight Capital, representing a 63% premium to the group\u2019s shares closing price the week before.<\/p>\n\n\n\n In the meantime, there was continuing high levels of activity in the wealth management sector, including Fairstone\u2019s acquisition of West Midlands-based Prosperity Wealth, with \u00a31.5bn AUM, and Benchmark Capital\u2019s acquisition of Swindon-based Unique Financial Planning, with \u00a3755m of AUA. HMFC Wealth acquired London-based Weston Cummins, with \u00a3350m of AUA, and Ascot Lloyd bought Swansea-based Portfolio Financial Consultancy, with \u00a3323m of AUM. One Four Nine announced the acquisition of Plymouth-based Rainbird & Co, increasing its client assets to \u00a31.4bn, while Lumin Wealth added \u00a385m to its AUM with the acquisition of Essex-based The Big Picture Wealth Management. Investment management group, Marlborough Group, took a minority shareholding in advice firm, Truly Independent, which advises on \u00a31.5bn of client assets. It was also rumoured that Close Brothers Group is exploring the sale of its wealth management division, Close Brothers Asset Management.<\/p>\n\n\n\n Elsewhere in the sector,\u00a0Defaqto\u00a0expanded its investment research capabilities with the acquisition of\u00a0MI Capital Research, and\u00a0Abrdn Smaller Companies Income\u00a0announced its merger with\u00a0Shires Income. Pension administrator\u00a0Smart Pensions\u00a0increased its AUA to \u00a34bn with the acquisition of\u00a0Evolve Pensions, and\u00a0LifeSearch, the independent protection specialist, announced it had partnered with\u00a0Neilson Financial Services, a globally focused provider of life insurance, becoming its exclusive advisory arm.<\/p>\n\n\n\n *IMAS Corporate Finance LLP has been acquired by MarshBerry.<\/p>\n","protected":false},"excerpt":{"rendered":" Since January 2021 more than half of all announced transactions in the UK in the general insurance and investment sectors with a value between \u00a35m and \u00a325m have been done on an unadvised basis. Buyers devote considerable effort in trying to secure off-market (i.e. unadvised) deals although they will readily admit that such processes typically […]<\/p>\n","protected":false},"author":7,"featured_media":3674,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[20],"tags":[],"mu_industry":[49,50],"tvp_industry":[],"class_list":["post-2342","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-m-a","mu_industry-insurance","mu_industry-investment"],"yoast_head":"\n