Chief exec Henderson reveals merger would pave the way for future IPO or sale

Henderson Insurance Brokers chief executive Joe Henderson has opened the door to a merger with another broker.

Henderson, who ruled out a sale or a large acquisition, wants to combine his business with a firm that is “similar or complementary”, with a view to an exit in three to five years.

In an exclusive interview with Insurance Times, he said: “The way forward is a merger. Perhaps in different regions or even the same regions, because we can merge the offices and make the most of the talent. “[It would be] someone with the same kind of aspirations and client ethic that we have. It would be a proper merger.”

Henderson, who is the single largest shareholder in the company with a 76% stake, said he would like to stay on and lead the combined businesses.

“We would look to do something by next year. What the merger would be is a stepping stone to something else three to five years after that – and that would either be a float or a sale.”

In its preliminary results for the year ended 30 April 2011, Henderson said revenue exceeded £20m for the first time in the broker’s history, following a 14% increase in organic growth from £17.6m. The broker expects pre-tax profits in the “lower single digits”, with the rate of growth expected to fall compared to an average annual increase of 12%.

In its previous full-year accounts, Henderson recorded an 11% rise in pre-tax profit, to £1.84m. “We are all aware of the facts surrounding the economy and competition,” Henderson said. “Nevertheless, the results are acceptable, although we anticipate a return to double-digit profits in the new financial year.”

Henderson has also recruited a new Leeds branch manager. Greg Markham has returned to the company after 18 months at Towergate.

Pass notes: Henderson goals

How big is Henderson?

Henderson currently operates from 11 offices in the UK with 320 staff, controlling £150m-£200m GWP. It wants to expand outside of its Leeds headquarters, including Manchester, where it recently revealed plans to increase GWP from £8m to £25m in five years.

Why has it ruled out a sale?

Chief executive Joe Henderson says the broker has never been approached. He refuses to sell up now and thinks a merger is the best way to increase the size of the business ahead of a sale, rather than saddling the company with debt through acquisitions.