Every major broker, it seems, is on the acquisition trail as economies of scale become all the more important in today's market. Hill House Hammond is no exception. With its network of 260 branches, it is growing at a faster rate than most.
What began as a personal lines venture is being developed further by a fresh perusal of the commercial lines sector.
Director Paul Tonkin comments: "We have had to keep evaluating the way we do business because the market keeps changing. A lot of our acquisitions have been in the personal lines sector, but we are also looking at small commercial business as well as specialist niche lines."
Founded in 1959 by Arthur Holmes under the name of Hill House, the company became known as Hill House Hammond (HHH) in 1983 when it was bought by Hill Samuel through its Lowndes Lambert subsidiary.
Growth both organically and by acquisition was on the agenda under both ownerships. By 1991 - the year Norwich Union purchased the company - the firm had developed a network of 133 branches.
Today HHH deals with a panel of leading insurance companies and services the needs of 1.2 million customers.
Tonkin says: "We are mostly approached by the firm itself when looking for new companies to buy. We will not dismiss any business out of hand, but we have identified areas of the country where we would like to grow.
"We also carry out advertising and marketing to the broker market so they know we are on the look-out. Sometimes we gain new business opportunities through cold-calling."
Tonkin says a typical acquisition process will begin with a phone call from someone looking to sell their business.
"Most of these calls are from old and established second-generation businesses. Undoubtedly selling up will be a big step for them, so we always try to have a series of meetings to understand what they want from selling the business.
"Often it is people who are ready to retire, so we try to establish early on what we want and also what they want from the business deal. We try to be flexible where we can.
"People we buy from are worried on two counts. First, they have built up a business in a town and become associated with that business. In that regard, they will be very selective about who they sell to. They want to have confidence in the people with whom they do business to run their company professionally. Second, they are worried about the staff - a fear that is usually unfounded, as it is not often that we buy a company without choosing to take the staff with us."
HHH's acquisitions ethos differs from that of other companies, such as Layton Blackham. When they buy a company, it becomes part of the Hill House Hammond network and becomes re-branded virtually overnight.
"We don't spend a lot of time in the research stages. After the initial meeting, we can quickly assess whether or not the business is right for us," says Tonkin. "If it is right, we send a letter of offer and the whole process after that takes about eight weeks. From the day of the take-over, the company's name is changed and the clients are written to and informed about the acquisition.
"We then get the vendor to send a letter of endorsement, which is very important because customers know them and usually take comfort in a letter of this sort."
Expansion and technology
Tonkin believes that technology has played an enormous role in HHH's expansion rate. "The cost of technology has played a huge part in a number of broker's decisions to sell up. Brokers tend not to be computer experts. They end up investing reasonable sums of money but the technology keeps changing and costs gets higher and higher.
"Brokers also have to consider the impact of the internet. We have a fully active site, since it serves as another distribution channel and we have to try to cover all the angles in order to compete with the direct writers. We also need to ensure that we adapt with the market."
As for the future Tonkin says that the company is going to remain committed to the high street broker. He adds: "Our plan at the moment is to expand to 300 branches. That is our limit for the time being. The remaining network will probably come from the identified areas in which we are not represented.
"Throughout this process, we have to consider our relationship with insurers. Because we work on a totally delegated basis, we work very closely with our panel of insurers. We have to make sure we only expand with quality businesses."