CALEDONIA — After growing rapidly and closing dozens of transactions with the backing of private equity, executives and minority shareholders at insurance broker Acrisure LLC are acquiring a majority stake in the company.
The Caledonia-based Acrisure signed a definitive agreement for a management-led buyout of San Francisco, Calif.-based private equity firm Genstar Capital.
Acrisure CEO Greg Williams expects the deal to close toward the end of November. Genstar will retain a minority stake in the company, which received a $75 million capital commitment from the private equity firm more than three years ago and embarked on an aggressive growth and acquisition strategy.
The management-led buyout would give Genstar Capital a partial exit from Acrisure and a return on its investment. Acrisure and its operating partners — the former independent agency owners who sold to Acrisure and received an equity stake as part of their deal — in turn will get control of the company and its board by “forgoing financial benefit today for the ability to control our destiny going forward,” Williams said.
Terms of the transaction were not disclosed.
“Genstar’s been a terrific partner. I can’t say enough about their belief in us, and a belief backed in capital,” said Williams, who founded the company in 2005. “There’s a stage in everybody’s investment cycle for monetizing the value that’s been created, and this is the right time for them to do that.
“It was time for them to take some chips off of the table. It was something that worked and fit for both sides.”
Since mid-2013, Acrisure has acquired 138 independent insurance agencies across the nation, establishing a presence in 26 states and growing revenues from $38 million to an anticipated $700 million in 2016. Acrisure closed on nearly 50 acquisitions so far this year and will likely end 2016 with 60 deals, Williams said.
The buyout will not slow Acrisure’s acquisition pace and could actually accelerate deal flow, Williams said. Acrisure “continues to evaluate a strong pipeline of attractive opportunities.”
“I would expect as this becomes known and we’re not an investor-controlled entity, the number of people interested in doing a deal with Acrisure will increase, frankly,” he said. “The appetite’s not going to change other than it may actually increase.”
Acrisure employ about 2,700 people corporate-wide. About 200 workers are based at the the company’s headquarters in Caledonia.
A quarterly report on M&A activity in the industry states that Acrisure still has plenty of opportunity as consolidation among insurance brokers continues to pick up across the U.S. Through September, the industry recorded 344 transactions, versus 338 in the first nine months of 2015 and 255 in the same period of 2014, according to Chicago-based Optis Partners LLC.
“The M&A marketplace continues to be very active with no end in sight. Interest rates remain low, and money is plentiful for buyers to continue aggressively investing in the insurance broker community,” according to Optis Partners’ third quarter summary.
Optis Partners counts 456 transactions across the U.S. in 2015, which compares to 359 in 2014 and 271 in 2013. In the 12-month period from September 2015 to September 2016, there were 462 acquisitions of insurance brokers, the company reported.