Investors initially wanted to up their ante and take their stake in Caledonia-based Acrisure LLC to several times their existing holdings.
Executives at the insurance broker balked at the idea, preferring not to bring in more outside money following a management buyout of private equity investors in 2016.
Top executive: Greg Williams, president and CEO
Annual sales: $1.2 billion for 2018. Projected $1.9 billion in 2019
Full-time West Michigan employees: About 500 out of 7,100 globally
Brief business description: Insurance broker
Advisers: Varnum LLP of Grand Rapids and Skadden, Arps, Slate, Meagher & Flom LLP of New York City (legal); Evercore Inc. of New York City (financial)
Yet they kept talking, and ultimately worked out a deal where GSO Capital Partners and Harvest Partners SCF LP, both based in New York City, and Switzerland-based Partners Group invested $2 billion in Acrisure.
The deal, which closed in December 2018, reduced Acrisure’s cost of capital, “parked some cash on the balance sheet” to continue an aggressive M&A strategy and expansion in the U.S. and globally, and benefitted 1,000 common shareholders through a dividend, said Matt Schweinzger, CFO and chief acquisition officer who leads M&A at Acrisure.
“We accomplished all three and we continue to build and grow,” Schweinzger said.
Acrisure’s $2 billion capital raise won the professional services category in the 2019 MiBiz M&A Deals of the Year Awards.
Critical to putting the deal together with the investors was ensuring all parties were aligned on what they wanted out of it.
“You have to make sure that you’re aligned entirely on the end goal as you enter these transactions that are oftentimes pretty complex, include a number of different parties at the table, and sometimes are represented by a number of different law firms and tax advisers. It’s really important to make sure everyone is aligned on the end-all, be-all goal of the transaction, because as soon as one party, one lawyer or one adviser is not aligned, you’re going to have significant problems with the deal,” Schweinzger said.
Raising capital also requires “complete honesty and transparency in terms of what it is we’re setting out to do and why we’re setting out to do it,” he said.
President and CEO Greg Williams formed Acrisure in 2005 to invest in independent insurance agencies. Through an aggressive M&A strategy, Acrisure has grown into one of the largest insurance brokers in the world, with 450 locations in 37 U.S. states and 14 offices globally with revenues of more than $1.2 billion in 2018.
The company is on track to generate $1.9 billion in revenue this year, Schweinzger said.
Each of the three investors involved in the capital raise were parties to financing the $2.9 billion management-led buyout three years ago of San Francisco-based private equity firm Genstar Capital.
“Since we initially invested in Acrisure in 2016, we have been very pleased with the company’s progress and have chosen to significantly increase our level of investment,” Louis Salvatore, senior managing director at GSO Capital Partners, said in an announcement last year of the deal. “Acrisure has grown at an accelerated rate as a result of the efforts of Greg and his management team and agency partners who control the company. Based on this progress, we are very optimistic about the company’s continued future performance and we remain strongly supportive of the team as it accelerates Acrisure’s growth trajectory.”
Acrisure for the last several years has been the largest acquirer in North America of insurance agencies during an ongoing period of industry consolidation, closing on 312 deals from 2015 to 2018, according to Optis Partners LLC, a Chicago-based firm that tracks M&A activity in the insurance brokerage industry. That equates to nearly half of all the deals during that period.
Acrisure closed on 102 deals alone in 2018 and is on track for 110 acquisitions this year based on completed transactions and signed letters of intent, Schweinzger said.
“Deal flow is incredibly strong,” he said. “Our pipeline is literally as strong as it’s ever been and somewhat reflected in the number of transactions that we’ll do this year. We’ve got nothing but continued opportunity going forward.”
More than eight out of 10 deals originate from internal referrals from existing partners whose agencies Acrisure previously acquired. In relying primarily on those referrals, Acrisure is “really and truly building the business on the backs of existing shareholders, not on investment bankers and not on a deal broker,” Schweinzger said.
Acrisure targets independent insurance agencies and brokerages whose owners are willing to sell a majority stake and remain to run the business locally. Sellers, who become shareholders in the company, can centralize some or all of the back-room I.T., human resources and accounting administrative functions with the corporate office.
Of late, the acquisition strategy has taken Acrisure to the United Kingdom, Germany and the Netherlands. The company looks for future European acquisitions in Belgium, Luxemburg, Spain and Ireland, Schweinzger said.
“We continue to look to expand internationally where it makes sense for our existing partners, our existing clients, and the underlying economics of the company,” Schweinzger said.
FINALIST:View Newspaper Group acquires Stafford Media
The sale to Lapeer-based View Newspaper Group this summer ended 68 years of Stafford family ownership of the Greenville Daily News and its commercial printing operation.
View Newspaper Group acquired the daily newspaper and Stafford Printing in a deal that closed in June. The deal expanded View Newspaper Group into West Michigan. The company, founded in 2003, covers Lapeer, Sanilac, Huron, Saginaw, Shiawassee, Genesee, Oakland and Livingston counties with titles including The County Press, Tri-County Times, Sanilac County News and Brown City Banner.
The transaction was named the finalist in the professional services category for the 2019 MiBiz M&A Deals of the Year Awards.
In opting to sell to View Newspaper Group, the Staffords found a buyer that took the time to get to know the family and went the “extra mile” in respecting their legacy, said Julie Stafford, who remains the publisher of the Daily News and who owned Stafford Media with her brother, Rob Stafford.
The acquisition also gave View Newspaper added commercial printing capacity. The company also owns Michigan Web Press, a long-time competitor of Stafford Media’s commercial printing business that has more than 160 clients.
“The Greenville (deal) makes sense because of the acquisition of the printing company and the synergies that that gives us with our printing company,” View Newspaper Group Publisher Wes Smith said at the time. “The operations are really complementary.”
Terms of the acquisition were undisclosed. The Stafford family worked with Santa Fe, N.M.-based media M&A firm Dirks, Van Essen, Murray & April and was represented in the transaction by Grand Rapids-based Miller, Johnson, Snell & Cummiskey PLC.