Arthur J. Gallagher: no plans to slow acquisition activity

They consistently top the acquisition market, and they’re predicting another strong acquisition year

Arthur J. Gallagher: no plans to slow acquisition activity

Insurance News

By Sam Boyer

If it seems like almost every time you look online you’re reading about another acquisition by Arthur J. Gallagher – and that’s kind of the way they want it.

Arthur J. Gallagher (AJG) is known for its acquisition activity. Every year, AJG is in the top couple of insurance companies in terms of acquisition numbers. Bill Bohstedt, corporate vice president of mergers and acquisitions (M&A) at AJG, spoke with Insurance Business about the strategy – and why the company wants to keep buying up brokerages.

Bohstedt, responsible for developing and managing the property/casualty operation’s national acquisition campaign, spoke about his division’s activities specifically, but said the wider company’s acquisition activity was largely based around the same principles.

“We’ve done well over 500 acquisitions since we went public in ’84. It’s part of our DNA, really, throughout our entire company. So everybody from the top down thinks about finding great merger partners, regardless of where they are located or what they do, from a standpoint of fitting into our company,” he said.

“We have been the leaders [in acquisition] numbers, really, for years and years. We’re number one or number two almost every year. We’re very active.”

In early 2017, a private equity firm was actually top in the number of brokerage acquisitions, Bohstedt said.

“In the first quarter of ’17, we were in second. But we don’t strive to have to be the leading acquirer every year,” he said. “We’re more focussed on doing really good, strategic acquisitions that are the right fit for us. Gallagher has consistently been the leading public acquirer in this space.”

In terms of what AJG is looking for in their “strategic” acquisitions, Bohstedt said they want companies with a “cultural” fit. Clearly, too, they want a lot of them.

“The firms that we’re targeting, they are all competitors of ours. They do what we do, they’re just smaller,” he said.

“We’re looking for really well-run companies with great people and cultures. That’s really the key. Everybody is on the same page in terms of seeking companies that are growing and have a sales culture, and with principals, who want to continue to be active and work for years to come and help grow the business.”

That final point is important, Bohstedt said. The staff of the companies they acquire need, for the most part, to want to remain and adopt the AJG way.

“[Rather than] somebody that’s going to join us and then retire immediately – even though we can do those – we prefer to have people who are really going to be engaged and stay with us for the long term,” he explained.

And AJG plans on sticking with its acquisition model, as it continues to grow its business. Bohstedt said the plan remains the same – and the company is on track again with big acquisition numbers.

“We’re very bullish on continuing to find good merger partners,” he said. “I’ve broadened my [M&A] team here in the United States. We’re going to do more and more mergers.

“In our property/casualty division we’re off to probably our strongest start in years. We’ve got a very, very full pipeline. I think we’re going to continue to have a great year in 2017.”

Related stories:
Arthur J Gallagher makes double acquisition
AJ Gallagher snaps up yet another brokerage

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