The Chicago-area insurance brokerage firm that acquired Grand Rapids-based Lighthouse Group intends to look for other deals in Michigan.
Alera Group, which started four years ago and now has more than 90 offices and 2,000 employees across the U.S., wants to accelerate organic growth through additional mergers or acquisitions in Michigan.
“We’re their platform in Michigan,” said Lighthouse Group Managing Partner Tom Helmstetter, who started the insurance agency in 1995. “That’s clearly something that they’d like us to explore for them, to see where that might happen. Consolidation in our industry, you see it all the time. It’s happening at quite a quick pace.”
Across the U.S., Chicago-based Optis Partners LLC — which tracks M&A in the industry — counted 466 transactions through the third quarter, a decline from the 499 deals in the first nine months of 2019 that reflects a disruption in deal flow during from the COVID-19 pandemic. M&A activity totaled 170 deals in the third quarter alone, virtually equal to the 171 mergers in the same period a year earlier, according to Optis Partners.
After the 25 percent decline in the second quarter, the firm expects deal flow in 2021 “should continue unabated due to the increasing supply of capital chasing a still very large inventory of sellers.”
Lighthouse Group in recent years has grown by high single or double digits, Helmstetter said. The firm today employs 175 people at eight offices across Michigan. Helmstetter points to the company’s Troy office that opened in July as providing a base for growth and potential M&A in the Detroit area.
“We hope to expand that office, both organically and with some possible mergers,” Helmstetter said. “We’ve had that office open just a short time now, but already we’re seeing some real successes over there, so we think that’s going to be a natural growth area for us.”
The deal with Alera Group came as Lighthouse Group management was thinking about “what might happen in the next few years,” Helmstetter said. The agency connected with Alera Group, an active buyer in the industry, through professional networking.
The deal gives Lighthouse Group deeper expertise and insight in areas such as data analytics, benchmarking, plan design, and risk management and mitigation, Helmstetter said.
“We’ve been very successful, but just because we’ve been successful in the past doesn’t mean it’s going to continue,” he said. “It provides a national-size company with the resources. We’ll still retain that local touch, but have those resources a national company can bring to us.”
Terms of the deal were undisclosed. Strategic consulting and M&A advisory firm MarshBerry Capital Inc. in Woodmere, Ohio, served as financial adviser to Lighthouse Group in the transaction.
Alera Group CEO Alan Levitz called Lighthouse Group “an exciting addition” to the firm.
“There is a very natural cultural fit between our two collaborative organizations and an opportunity for Lighthouse to leverage Alera’s national platform for the benefit of their clients,” Levitz said.