Brown and Brown Massachusetts has expanded its geographic footprint within the Commonwealth with the acquisition of the Berkshire Insurance Group, Inc. (BIG). Founded in 2000, BIG, a subsidiary of the Berkshire Hills Bank, has grown into one of the largest insurance agencies in Western Massachusetts serving customers across the Northeast. The deal is expected to closed in the third quarter of 2021.
According to the terms of the transaction Brown & Brown has offered positions to the entire existing BIG staff resulting in no job eliminations. Upon completion of the acquisition, BIG will transition into a new stand-alone operation within Brown & Brown’s Retail Segment under the leadership of John Flaherty. BIG’s offices in Greenfield, Longmeadow, Pittsfield, Stockbridge, and Westfield, Massachusetts will continue to operate from their current locations, and its other locations will physically combine with existing Brown & Brown offices. In addition, through a partner relationship, Berkshire Bank will continue to refer customers to Brown & Brown.
Don McGowan, a Regional President in Brown & Brown’s Retail Segment with responsibility for various offices in Massachusetts and the Northeast, will oversee the new, combined operations.
In commenting on the acquisition and the addition of BIG, Mr. McGowan stated, “This transaction allows us to further expand our footprint in Massachusetts with several new strategic locations that we believe enable us to better serve our customers. We are excited to welcome all of the talented BIG teammates to the Brown & Brown organization and look forward to finding fresh opportunities to offer a wide range of insurance products and services to new and existing customers.”
Building on that comment BIG, Sean Gray, President & COO of Berkshire Bank added, “Berkshire has entered into an exciting partnership with Brown & Brown through which we will be able to serve our customers better with an expanded offering of insurance solutions. I also want to thank the dedicated team of employees at BIG, whom I’ve had the privilege of working alongside for the past ten years, for their contributions to Berkshire and all our communities. I know they will continue to serve Berkshire customers well in their new roles with Brown & Brown.”
“Consistent with Berkshire’s Exciting Strategic Transformation (BEST) program, this transaction allows us to simplify our operating model, repurpose valuable resources and redeploy capital to support core businesses and strategic initiatives that will enhance long term stakeholder value,” stated Berkshire CEO, Nitin J. Mhatre. “As a result of this transaction, we will record a net gain on sale of approximately $0.55 per share on a GAAP basis in the third quarter, and anticipate $0.02 lower earnings per share in the second half of 2021.”
As a public company BIG was required to disclose the purchase price to the SEC
While no further terms of the transaction were announced in the official press release, Berkshire Bank was required to disclose the purchase price in its regular filing to the SEC. The following is a reprint of the disclosure it made in the filing:
“Pursuant to the terms and subject to the conditions set forth in the Agreement, at the closing of the transaction (the “Closing”), Buyer shall pay BIG an aggregate purchase price of $41.5 million, minus $1.6 million for executive goodwill purchase price payments payable by Buyer at the Closing to certain executives of BIG.”
The following is a breakdown of the purchase price as outlined in the SEC filing:
Section 1.4 Purchase Price.
(a)
The consideration for the Acquired Assets and the Restrictive Covenants will be the assumption of the Assumed
Liabilities, plus an amount (the “Purchase Price”) equal to $41,500,000, minus $1,600,000, the Executive Goodwill Payments.
The Purchase Price will be paid as follows:
(i)
Buyer will pay to Seller at the Closing, a payment (the “Closing Payment Amount”), as set forth on the Closing
Statement and equal to the following:
(A)
$41,500,000.00, minus
(B)
$1,600,000.00, the Executive Goodwill Payments; minus
(C)
the Non-Compete Amount, as set forth on the Closing Statement, which will be allocated $1,000.00 to Seller and
$10,000.00 to the Shareholder; minus
The Purchase Price will be paid as follows:
(i)
Buyer will pay to Seller at the Closing, a payment (the “Closing Payment Amount”), as set forth on the Closing
Statement and equal to the following:
(A)
$41,500,000.00, minus
(B)
$1,600,000.00, the Executive Goodwill Payments; minus
(C)
the Non-Compete Amount, as set forth on the Closing Statement, which will be allocated $1,000.00 to Seller and
$10,000.00 to the Shareholder; minus
