IPO not on the table, founder says
CALEDONIA — In the more than five years since Greg Williams founded the company, Acrisure LLC has become the most prolific acquirer of independent insurance agencies in the U.S.
The Caledonia-based Acrisure closed on more than 100 acquisitions in 2018. Now with additional capital from investors, Williams expects to complete a similar number of deals in 2019.
Throughout the more than 400 acquisitions the company has made since 2013 — and those Acrisure plans to make in the future — the cultural fit with the seller matters as much, if not more than, the economics of a deal.
“We talk about aligned interests all the time,” said Williams, who defines the culture of an acquired company as including the leadership that owned, built and led the business to success over the years.
In scouting for acquisitions, Acrisure looks for willing sellers who will retain a minority stake “that matters” and continue to lead the business, hopefully as successfully as they always have.
“More important than anything else is having the entrepreneurial spirit and the drivers and leaders of those businesses staying in place. That’s part of the culture and they created that culture. Leadership is immense in terms of the most important thing,” said Williams, adding that Acrisure in 2018 looked at 590 prospects to close 103 transactions.
“Economics are always important, but they’re second to leadership and aligned interests and all of that,” he said. “We look at a lot of businesses that on paper look good, but if the leader is leaving or looking to retire or exit, that’s a bad omen for the direction of the business. Not often, generally speaking, do you see really successful companies that have strong leadership, and that leadership then retires or leaves and those businesses prosper.”
That business model has made Acrisure the biggest acquirer of independent insurance agencies in North America during an era of rapid consolidation for the industry.
The acquisition strategy has grown Acrisure’s annual revenue from $650 million to $1.5 billion in two years, and increased the company’s enterprise value to more than $7 billion today from $2.6 billion in 2016.
That’s when Williams, along with a consortium of minority investors, led a management buyout of previous private equity investors in Acrisure. Employees presently own 83 percent of the company, while the consortium of investors owns the rest.
As 2018 was winding down, those investors — GSO Capital Partners and Harvest Partners SCF LP, both based in New York City, and Switzerland-based Partners Group — invested another $2 billion in Acrisure.
“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 a statement. “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.”
About $240 million of the capital will go toward future acquisitions in the U.S., Canada and Europe, where Acrisure acquired a London-based insurance broker a year ago.
The company was not looking to raise additional capital, Williams said. Current investors “are excited by what we do and wanted to invest even more in the company,” he added.
“We didn’t really need more capital, but it was a matter of they wanted to increase their investment with us so they essentially stepped into the shoes of other investors,” Williams said. “We have dry powder to continue to do M&A at a pretty rapid pace.”
Acrisure today owns more than 400 partner insurance agencies in 32 states that offer property and casualty policies, employee benefits, human resource outsourcing, loss and claims management, surety bonding and personal insurance solutions. The firm employs about 5,600 people.
Acrisure has been accelerating its acquisition strategy amid the industry’s consolidation wave. The company closed 92 deals in 2017, 63 in 2016, and 56 in 2015, according to a quarterly report on Chicago-based Optis Partners LLC.
The firm, which tracks M&A among insurance brokers, noted in its third quarter report that there was “no obvious end in sight for the continued aggressive M&A activity and valuations.”
Nationwide, Optis Partners counted 463 transactions for insurance agencies through the first nine months of 2018, which compares to a highest-ever 468 deals during the same period in 2017. The nine-month total exceeded the number of full-year transactions for every year other than in 2017, which had 611 deals.
As measured by closed transactions, the third quarter was the best ever that Optis Partners has tracked.
In looking for acquisition targets, and with a deal pipeline that’s “more robust” than a year ago, Acrisure does not necessarily need a presence in every state, Williams said. The company will “go where the right partnerships and the right deals take us,” he said.
Acrisure now takes the same approach internationally. After an acquisition in early 2018 in the United Kingdom, Acrisure has “conversations going on” with companies in eastern and western Europe.
“It’s too early to say if something is going to happen or not, but I would not be surprised over the next year or two if we have an expanding presence beyond the U.K.,” Williams said. “This capital is setting the stage for a lot of those things to happen.”
As Acrisure continues its aggressive M&A strategy, one deal not in the future is an IPO, something that’s been speculated about in the Grand Rapids business community. Williams said he gets asked “all the time” about taking Acrisure public.
“We’re not looking to change the fact that we are a private company. Going public is not the next step in the future,” he said. “We don’t have to go public to provide liquidity. We can provide liquidity to people ourselves.”