The Hilb Group is a classic roll-up
One of the tried and true investment strategies of hedge funds involves finding industries with a large number of small companies that the fund can acquire and combine to increase their economies of scale. The process is so standardized that it has a name: “Roll up.” Once the fund has acquired a sufficient portfolio of acquisitions, it can sell the entity owning the acquired companies for a substantially higher multiple than the fund collectively paid to buy the small companies involved in the rollup.
The American Agency System is a ready-made market offering investment firms the possibility for profitable rollups. The Hilb Group is one such successful rollup that is now apparently up for sale.
The Hilb Group has had an agency buying spree since its 2015 acquisition by ABRY Partners
The Hilb Group began as an insurance broker in 2009, in Richmond, Virginia, In 2015, ABRY Partners, a Boston-based equity fund acquired the Hilb Group as a portfolio company by taking over the stake held by another private equity firm. The Group’s management though retained some stake in the business.
Since 2015, with Arby’s financial backing, The Hilb Group has grown exponentially through the acquisitions of small and middle-market insurance brokerages. In 2019, alone, the Group has announced eighteen agency acquisitions In total, Hilb has 85 offices spread across 21 states.
In that time, according to “Business Insurance,” the Hilb Group has moved up to number 28 in that publication’s most recent list of the country’s largest insurance brokers with 2018 income of $141.7 million.
Asking price for the Hilb Group $1 billion-plus
On October 15, Reuters reported that ABRY Partners, a Boston-based equity firm, was working with an investment bank to sell its majority stake in the insurance broker, the Hilb Group. The investment bank is JP Morgan, according to other sources.
The Hilb Group reportedly generates earnings before interest, tax, depreciation, and amortization (EBITDA) of around $75 million, according to sources who had spoken to the reporters on condition of anonymity. The Reuters article claimed that insurance brokerages sell for a price between 13 to 15 times EBITDA. Based on those multiples, the sale price, all things being equal, should value the Hilb Group at somewhere between $975 million and $1.1 billion.
Many of the Hilb Group’s acquisitions have been in Massachusetts
The following isAgency Checklists’ running list of the Massachusetts-based agencies that the Hilb Group reportedly acquired since 2009. Since we only started reporting on M&As and this agency in particular in 2016, the 2015 transaction does not have a link.
- The Hilb Group Adds Massachusetts-based, The Incentive Group To Its Growing Massachusetts Base (2019)
- The Hilb Group Acquires The Handy-Apple Valley Agency (2019)
- The Hilb Group Acquires Massachusetts’ Marsh-Kemp Insurance Agency (2019)
- The Hilb Group’s December Hat Trick: Three Mass. Agencies Purchased In A Month (2018)
- The Hilb Group Acquires Massachusetts DBR Group (2018)
- The Hilb Group Acquires BAR Insurance Brokerage of Needham (2018)
- Massachusetts’ HR Knowledge Acquired By The Hilb Group (2017)
- Massachusetts’s “Five Star” Agency, Mid-State Insurance, Purchased by THG (2017)
- The Hilb Group acquires Sapers & Wallacks (2017)
- The Hilb Group Acquires Hyannis’ Dowling & O’Neil (2016)
- Hilb Group Announces Acquisitions of Insurance Firms Gencorp and Cornerstone (2015)
About ABRY Partners
ABRY invests in high-quality companies and partners with management to help build their businesses. Since its founding in 1989, ABRY has completed over $42.0 billion of leveraged transactions and other private equity, mezzanine or preferred equity placements, representing investments in over 450 properties.
ABRY concentrates on industry sectors where they have substantial operating and investment experience and seeks to bring their industry insight into the investment process to understand key issues, accurately assess opportunities, and apply relevant information. ABRY seeks to partner with skilled executives and invest significant capital to help build stronger companies that become industry leaders.
For more information about ABRY, see www.abry.com.