Company has spent £36m on acquisitions in the past 12 months

Towergate is focusing on larger acquisitions as it completes its group transformation plan, according to group chief executive Mark Hodges.

Speaking to Insurance Times about the broking group’s first half results, Hodges noted that the company is doing fewer but larger deals and was wary about buying smaller firms.

Towergate made six acquisitions in the first half of 2014, down from 10 in the same period last year.

Hodges said: “That is linked to the amount of change we are going through. While we are reshaping the whole of the broking division, bringing in lots of additional small broker businesses to fit into the model probably doesn’t make as much sense.”

He added: “Our ability to fund deals is undiminished. It is something we want to do. We are just thoughtful about the types of deals we would do at the moment and we are selective.”

Hodges said that Towergate was also interested in larger deals because the group is now bigger, and so needs chunkier acquisitions to boost revenue and profit.

But he added: “It doesn’t mean we are not interested in good consolidation deals in the regional broking market. We just will want to be clear with the people who are selling those businesses what model they will be joining.”

Towergate spent £36m on 13 acquisitions between July 2013 and June 2014. The deals included two large deals: high-net-worth motor broker Footman James, which closed in December 2013, and underwriting agency Arista, which completed in April 2014.

The group’s earnings before interest, tax, depreciation and amortisation (EBITDA) has already enjoyed a £3m boost from these 13 deals, and Towergate expects them to generate a further £8m EBITDA benefit over the next 18 months.