Although not aiming for world domination, PIB Group does want to ‘build a volume business right across Europe’, says chief executive
Intermediary organisation PIB Group is setting its cap more firmly towards the Continent in terms of its M&A pipeline because it is “just running out of opportunities in the UK” to continue its current pace of consolidation and growth, according to Brendan McManus, PIB Group chief executive.
Speaking exclusively to Insurance Times, McManus confirms that although PIB Group already has an operational presence in the Channel Islands, Ireland, Germany, Poland, Denmark, Spain and the Netherlands – as well as the UK of course – the broker plans “to build a volume business right across Europe” in the coming years.
“My strategy is to look at other European countries where we can drive consolidation. Or, alternatively, where we find businesses that are specialised in a sector that could give us several decades of organic growth,” he explains.
A driving factor for why McManus has homed in on Europe for PIB Group’s next bout of M&A activity is because rampant broker mergers in the UK have depleted the pool of prospective acquisition targets.
And McManus is not overly interested in buying the very small brokers that remain to join the 2,400-strong PIB fold because “they don’t make a difference to us when we buy them”.
He continues: “We’ve done pretty well in the UK. We’ve built a nice business here now and it’s beginning to get a life of its own.
“But one of our goals is to remain an independent business – albeit with investment from private equity.
“One of the ways that we make sure that is achieved is we continue our growth and it’s not reasonable to think that we can continue to consolidate businesses in the UK and give our investors the huge growth that we’re already doing because we’re just running out of opportunities in the UK.
“In 10 years’ time, I’m sure it will re-emerge and people will start businesses again, but at the moment, there are fewer and fewer targets.”
Considering why there appears to be a lack of new brokers entering the UKGI market, McManus lists “regulation [as] a contributing factor” as well as the need to have “deep pockets” and be “fairly driven”.
He also believes “it’s more difficult for people to recycle businesses and keep them within the same management team as happened once upon a time” because “businesses have got quite expensive” and “banks won’t lend against” the people assets that are the foundation of many broking companies - compared to financial assets, for example.
Accelerating M&A spending
So far, McManus’ strategy is going well. PIB Group currently has a number of deals going through the due diligence process in both Spain and Poland – he predicts the broker will “have quite a nice business in Poland by the end of this year”.
Ireland has been another territory of focus for the firm – PIB Group bought its fifth business in the country, retail commercial broker and financial planning firm Alan Tierney and Partners, in January 2022, for example.
“I like Ireland,” McManus says. “There’s a really amazing opportunity – there’s some good quality businesses in Ireland. I’m thrilled to bits with the businesses we’ve invested in so far.”
McManus hopes to ramp up PIB Group’s European spending this year following the peak of the Covid-19 pandemic in 2020 and 2021, which he believes hampered relationship building with European brokers and subsequently impacted PIB Group’s planned M&A progress.
Not a global broker
McManus is quick to emphasise, however, that he does not “want PIB to be a global broker” and is not targeting world domination.
“We’re not focused on dominating anything. We just want to build our business in the way that we want to build it,” he says.
Despite this, he acknowledges that the broker “won’t always stay in Europe” – although solely focusing on this territory is all the firm has the resources for in the short term.
He explained: “Wherever there is a financial opportunity, then we’ll go there.
“At the moment, we’re really focused in Europe and I’ve always believed that where you focus, you get success. If we try and do too many things at once, we might make more mistakes. I want to just focus on one territory at a time.
“The next four or five years, we’ll focus on Europe and if there’s an opportunity in the US or Canada, then we’ll take it, but not right now because we are focused on Europe. And then if there’s an opportunity in Asia, then we’ll go there as well.
“Our strategy will work for several economic cycles and across all other geographies.”