Stackhouse could attract £300mn valuation in pending deal

High net worth and commercial lines broker Stackhouse Poland Group is in takeover talks with multiple parties, The Insurance Insider can reveal. 

Sources told this publication that potential trade bidders AJ Gallagher, Aon, PIB and Acrisure had held sales discussions with the broker, although at least PIB has bowed out. 

A number of private equity houses, including KKR, Warburg Pincus and Chicago-based GTCR, are also said to have shown interest, and a deal could be concluded next month. 

Sources said the business could trade at as much as 15x Ebitda, suggesting a sale price of around £300mn ($380.5mn) on the adjusted Ebitda figure of around £20mn that has been used during marketing.  

Market sources have suggested that AJ Gallagher is the most likely acquirer out of the interested parties in what would be the first major deal for the Chicago broker since it paused UK M&A a few years ago. 

Warburg Pincus is also understood to have come close to agreeing a bilateral deal with Stackhouse around 18 months ago, before the broker decided it did not want to sell at that stage. 

If a deal for Stackhouse were concluded with a trade bidder it is likely the whole business would be sold, whereas a private equity deal would leave scope for a part sale. 

Evercore, which is advising on the sell side, has not run a traditional bid process, but talks with multiple parties are said to be advanced. 

Stackhouse Poland is majority owned by management and staff, while private equity firm Synova has a large minority holding in the Guildford-based firm. 

Stackhouse is one of the largest independently owned broking groups in the UK, and is considered a sought-after asset. The company has 22 offices around the UK, including locations in Birmingham, Bristol, Glasgow and London. 

High net worth brokerages tend to trade at a higher multiples to other general insurance intermediaries, and given its strong reputation a multiple of 12x Ebitda or above is feasible. 

Stackhouse has completed a flurry of M&A deals in the last two months, acquiring real estate broker Pii, high net worth and commercial lines intermediary Symmetry and legal indemnity brokers Title & Covenant. In April, the company bought commercial lines business Honour Point. Other transactions include marine, high net worth and commercial lines broker E Coleman in 2017. 

The firm’s landmark deal came in 2017, with the buyout of Lucas Fettes. That year, the firm also bought Coleman Insurance Brokers. 

However to secure a blowout valuation in the 12x-15x range, Stackhouse is likely to have to demonstrate organic growth as well as deal-driven increases in revenue. 

The prospective deal comes after a year of intense broker M&A activity. 

In September, Marsh & McLennan Companies (MMC) agreed to buy JLT for an enterprise value of $6.4bn. 

Smaller acquisitions included the BGC agreement to acquire Ed in October. 

The financial services holding company will add it to Besso, which it bought from BP Marsh for $86.6mn in February 2017. 

Integro also completed its takeover of Tysers in June this year after a long courtship, and Acrisure acquired Beach in March. 

Synova, Aon, AJG Gallgher, PIB, KKR and Acrisure declined to comment. Stackhouse Poland, Warburg Pincus and GTCR were not immediately available for comment. 

This story was updated on 28 December. 

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