Acquisitions ahead

Selling a business can be the perfect solution for many brokers. They may not be prepared to tackle impending regulation from the FSA. They could be planning for retirement and not have a succession plan in place. Or, a sale could simply be the best option in terms of securing a better financial future.

But, there is a down side to selling up. Many of the deals taking place right now by acquisitive companies mean brokers will lose their identities. There may be no place for existing staff. It is often the case of a book of business being sold and the broker firm itself being run down and closed. Vega Insurance Services offers a very different solution.

The newly-established company is at present in the market to buy a number of commercial lines brokers and will allow these firms to continue trading under their own names, offer existing staff career opportunities and encourage a firm to build on its current client base.

Vega managing director Bob Screen says the aim is to develop Vega into a £100m business in premium income within the next three years. "We'll be announcing our first acquisitions shortly. I've been travelling round the UK in the past two months and found the reaction to our proposition enormously positive from brokers.

"They want to stay part of the local community and we want them to do this. We respect the skill and experience there."

Vega, which has offices in London and Bristol, was set up this October and is backed by Primary Group, the insurance distribution company dealing in over £400m of premiums a year.

Screen was formerly marketing and commercial insurance director with national broker Hill House Hammond. He was responsible for developing its sizeable commercial lines portfolio and was involved with a number of acquisitions.

While Vega will focus on commercial lines, Screen says those which have a proportion of personal lines will be accepted. "We realise that many commercial brokers may also need to look after some personal insurances for clients. We'll be more than prepared to take this on."

Vega will also be working closely with insurers, but again is looking to incorporate brokers' needs into the equation.

An alternative to selling up is to join a network - and this may suit some firms where the principal is not planning to retire. Screen says this is something some brokers he meets are considering, but he explains there is widespread confusion. "There are plenty around to choose from, but deciding which, if any, is right is not easy. There is cost involved and there could still be compliance issues. Some may also feel their independence is tested. With us, we don't pretend to be a pseudo network, you become a part of Vega, but retain your own brand."

A further benefit is that being part of Primary means that there is financial strength behind the deal. Once terms are agreed, settlement is quick and a firm then benefits from further investment. "This could include IT or other development, to ensure firms achieve the most they can."

Staff training will also be a priority, as will finding those with enough ambition progression within the group. "In a small firm, younger members of staff may feel held back. In a large business like Vega, there will be far more opportunity to move around," he says.

In terms of the agencies they use, brokers will also be encouraged to trade in a business-as-usual manner, but to let Vega know where they would like schemes launched.

We don't want to push brokers into using specific schemes. The type of businesses we'll be buying will have their own arrangements. But if there are gaps or brokers request access to specific products, we'll set these up. Because of our buying power, we're finding insurers want to deal with us."

He adds that once a sufficient number of brokers have been purchased, Vega will began to "export expertise" from different firms. This could mean allowing access to other brokers' schemes and encouraging staff members to share knowledge."

And, as Screen concludes: "We want to emphasise, we're not about selling firms down the river. We know this is a people business and Vega will work because we're about maintaining those personal relationships. We are different and we think brokers who are looking to sell will like the way we do business."