Beecher Carlson: Heating Up M&A

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 acquisition arena another potential player appears ready to join the field.[@@]

Atlanta-based insurance broker Beecher Carlson said it has received a private equity infusion of $88.5 million from Austin Ventures, for acquisition of "specialty commercial insurance brokers, captive managers, and [to] attract top flight talent from both within and outside the insurance industry."

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

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

"This opportunity presents the strongest financial backing in an effort to build a team of industry leading experts and a first class corporate culture from the ground up," said Tom Golub, chief executive officer of Beecher Carlson Holdings Inc., the parent company of the broker.

Before joining the company, Mr. Golub was president and chief executive 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 $95.2 million and was acquired by HRH for $244 million. Mr. Golub was named 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-based Marsh, Berry & Company Inc., a management consulting firm to independent agents and brokers, noted that if the funds were used solely and successfully for acquisition, it could propel the firm into the top 50 brokerage firms in the country.

Mr. Lloyd, who is also executive director of two MarshBerry insurance associations, Agency Peak Performance Exchange and Bank Agency Network, said Beecher Carlson could become "a significant operation."

However, he noted that there is a "substantial amount of competition" in the M&A area, and brokers are becoming more aggressive than they have in the past to grow their firm's through acquisition.

He noted that the firm will have to prove it has a vision for the 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's another to make it work."

For its part, Beecher Carlson said its vision is to create a business that provides "closely integrated risk management consulting, statistical, analytical, finance and tax, captive management, and insurance and reinsurance brokerage services."

Mr. Golub told National Underwriter that the firm is looking for niche players who seek a national platform to grow from. He felt that with the firm's capitalization it would grow quickly, and there is a "lot of enthusiasm" among agencies interest in joining this model.

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

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