Verlingue UK focuses on employee benefits buys as UK M&A is ‘overheated’ and ‘alarming’

Verlingue UK – the British arm of France-headquartered Adelaide Group – plans to concentrate acquisitional growth this year on employee benefits broking rather than insurance, with the company’s chief executive, Mike Latham, describing UK broker M&A as “overheated” and “alarming”.

Speaking exclusively to Insurance Times, Latham confirmed that Verlingue UK is trying “to exponentially grow” its employee benefits resources, with “levers in place” to develop its Birmingham and Gloucester operational headcounts.

At the end of 2024, Latham told Insurance Times that he hoped to recruit or acquire an employee benefits team to sit alongside the four insurance professionals based out of Birmingham, as well as acquire “broking capability” to add to the Gloucester-based employee benefits team of 12.

Ideally, Latham wants to double the size of these teams in 2025 so that they are “fully fledged offices”.

These locations would then service clients alongside Verlingue UK’s existing premises in Manchester, which has 90 staff, and Surrey, where 80 employees operate from.

“We’re already speaking to talented teams,” Latham confirmed. “We’re also talking to a couple of potential employee benefits acquisitions, particularly in the Midlands.

“Our focus will probably be more on employee benefits. I [am trying] to exponentially grow that area.”

Paying too much for M&A?

For Latham, M&A in the UK broker market is either “alarming or exciting” – dependent on individual perspective. Latham noted that he falls firmly into the “alarming” camp, describing M&A in this country as “overheated” because “people pay far too much money” for businesses.

This view is supported by Benjamin Verlingue, chairman at Verlingue and chairman and chief executive at Adelaide Group. He added that in the UK, the price of M&A “is crazy and it is not for us”.

Although Adelaide Group overall is focusing primarily on its organic growth – which sat at around 10% for 2024 according to Verlingue – the chairman is remaining cognisant that increasing numbers of UK and US-based brokers are looking at Continental Europe for their next M&A purchases.

Verlingue explained that this trend is not impacting Adelaide Group’s bottom line as such because the firms being purchased, in his opinion, are “not so dynamic”. This means that acquirers “are taking turnover, but not changing so much the competition landscape”, he observed.

He further noted that the typical UK and US practice of acquiring teams is becoming more commonplace in Continental Europe too, as acquirers struggle to source appropriate firms they wish to buy.

“Some players can’t find the acquisition they are looking [for], so [they] are trying to hire teams – as is pretty usual in the US or in the UK. It’s less common in many Continental Europe countries, so it can destabilise the market a bit,” Verlingue explained.

More broadly speaking, Verlingue believes that increased M&A interest in Europe is leading to “a bit of [a] price increase, more demand” and “creating more offers” because “some people who never considered selling [before] are now questioning” this opportunity and “opening the market”.

Latham, meanwhile, feels that UK M&A activity is creating greater chances for MGAs to make their mark in UK general insurance.

He added: “It always strikes me that [megamergers] will give opportunities for more entrepreneurial approaches, whether it be a broker or a carrier.

“We’re seeing a shift towards MGAs, where MGAs are big in expertise and vibrancy and that entrepreneurial spirit and those enhanced propositions.

“The more the bigger companies become even bigger, the more opportunities [this] will provide for the more dynamic companies that that sit below them in size.”

Presenting a different M&A story

For Verlingue, “there are three types of buyer” when it comes to M&A.

He explained: “You have private equity that [is] still the main majority of the buyers – some are doing pretty well and some are just putting small brokers together and trying to sell it back. From my point of [view, this is not] creating so much value.

“We [also] see the comeback of global [broker acquirers], especially in Continental Europe. And what we are trying to push [is] a different story.”

Verlingue added that Adelaide Group – which currently operates across France, the UK, Switzerland, Portugal and Italy – is aiming to complete two to five acquisitions per year currently, targeting businesses that it can support to maintain “legacy” or develop into the “next level”.

He emphasised that M&A for Adelaide Group is not a pure money play, but a combination of hitting the right numbers and culture – he noted that the firm was certainly not rushing to add businesses to its stable and wanted to avoid “multiple arbitrage”.