Beecher Carlson: Heating Up M&A

By Mark E. Ruquet

NU Online News Service, Aug. 3, 3:50 p.m.EDT?Among the major brokers in the mergers and acquisitionarena another potential player appears ready to join thefield.[@@]

Atlanta-based insurance broker Beecher Carlson said it hasreceived a private equity infusion of $88.5 million from AustinVentures, for acquisition of "specialty commercial insurancebrokers, captive managers, and [to] attract top flight talent fromboth within and outside the insurance industry."

Founded in 1981, the firm was sold to American Re in 1989. Itwas purchased by management and employees in 2003. It describesitself as an insurance broker, captive manager and risk managementconsultant. Besides Atlanta, the firm has offices in Hamilton,Bermuda; Honolulu; Princeton, N.J.; Burlington, Vt.; and LosAngeles.

According to Beecher Carlson's Web site, its clients include"six of the world's leading auto manufacturers, five of the top 10hospitality companies, and one of the largest gaming companies inthe world."

"This opportunity presents the strongest financial backing in aneffort to build a team of industry leading experts and a firstclass corporate culture from the ground up," said Tom Golub, chiefexecutive officer of Beecher Carlson Holdings Inc., the parentcompany of the broker.

Before joining the company, Mr. Golub was president and chiefexecutive officer of Hobbs Group, which was acquired by Hilb, Rogal& Hobbs in July of 2002.

At the time of the acquisition, Hobbs reported revenue of $95.2million and was acquired by HRH for $244 million. Mr. Golub wasnamed an executive vice president for the firm and made a partner,HRH said at the time. He remained president and CEO of Hobbs.

In September of last year, what was then called Hilb, Rogal& Hamilton announced it was changing its name to Hilb, Rogal& Hobbs.

Mr. Golub left HRH in August of 2003.

Albert Lloyd, senior vice president of Concord, Ohio-basedMarsh, Berry & Company Inc., a management consulting firm toindependent agents and brokers, noted that if the funds were usedsolely and successfully for acquisition, it could propel the firminto the top 50 brokerage firms in the country.

Mr. Lloyd, who is also executive director of two MarshBerryinsurance associations, Agency Peak Performance Exchange and BankAgency Network, said Beecher Carlson could become "a significantoperation."

However, he noted that there is a "substantial amount ofcompetition" in the M&A area, and brokers are becoming moreaggressive than they have in the past to grow their firm's throughacquisition.

He noted that the firm will have to prove it has a vision forthe future, one that the targeted firm's will have to buy into.

"It's one thing to put the [capital] out there," he noted. "It'sanother to make it work."

For its part, Beecher Carlson said its vision is to create abusiness that provides "closely integrated risk managementconsulting, statistical, analytical, finance and tax, captivemanagement, and insurance and reinsurance brokerage services."

Mr. Golub told National Underwriter that the firm is looking forniche players who seek a national platform to grow from. He feltthat with the firm's capitalization it would grow quickly, andthere is a "lot of enthusiasm" among agencies interest in joiningthis model.

He predicted that the firm would become a public company at somepoint, but its capital structure would allow it to remain privatefor several years to come.

"What we like about either structure is that a heavy proportionis held by employees, and will be held by employees," he said.