Hodson: Oval will not squander war chest

Oval chief executive Phillip Hodson has said the broker will not hurry to spend its £115m acquisition war chest.

In his first interview since the broking group refinanced, Hodson said the company would be selective in its acquisition strategy and would not be looking for fire sales of distressed brokers.

Last week Oval completed a £115m senior debt facility to fund its acquisition and expansion programme, led by Barclays and Lloyds TSB. The facility is for five years.

Hodson said Oval had a healthy deal pipeline and was likely to complete four or five acquisitions by May 2009.

He added that the company had already walked away from around four potential acquisitions as it refined its purchasing strategy.

Oval was looking to buy good quality niche brokers, he said.

Hodson said: “We are not going to be like a boy in a sweet shop and spend it all. We will be selective. We rushed for two years to get growth but we are now going to take our time.”

Oval was in discussions with two financial services businesses and three niche insurance brokers, he said.

Oval ended its summer acquisition break last week, buying Liverpool-based Powell Insurance Brokers, and Williams Insurance Brokers, based in north Wales.

Hodson said the company would look to build scale in the north west of England.

He added that sale prices for good businesses would remain high despite the slow down in mergers and acquisition activity.

“Good businesses will always command high multiples; they don’t come cheap and you have to be careful when they are cheap.”

Hodson said that there could be some good deals available in the coming months as the economy continued to slow. “It is possible that over the next year will we might pick up some good companies that have over-reached themselves. But we are not looking for fire sales.”