Former owners of independent broker Walmsleys opted for MBO over potentially selling for a bigger price to a consolidator
Owners of an independent broker looking to retire have shown there’s more than one way to release funds from their business after rejecting approaches from major consolidators in favour of a management buyout.
Phil Wall and Steven Moore completed the MBO of the Wigan-based firm last month after six years in the planning.
The process involved a gradual passing of clients and responsibilities from former majority shareholders Martin Bellamy and Michael Whittle to the new owners, which Wall says made completion of the deal very easy.
Wall explained: “They came to us saying they were after a strategy for the future for their exit from the business and we’d like you to be that strategy. In terms of the mechanics of it all, it has been quite easy and straightforward, but there has been a lot of planning that has gone into it.
“But it meant on the date of the MBO when the shares transferred there wasn’t a change in the running of the business at all, just that the ownership had changed.
“It’s been made easier because the staff know as well. All staff knew what was happening and what the plan was, which meant they could be comfortable in their job security knowing the firm wouldn’t be sold.”
The firm employs 25 staff, many of whom live within walking distance of the broker, and places £10m GWP. Wall said the two former owners decided on an MBO ahead of approaches by PIB and GRP for the wellbeing of the staff, despite conceding that they potentially could have received more money had they followed up the approaches of the consolidators.
Wall added: “The exiting shareholders are very independent people, and they would definitely not like working under the umbrella of another company.
“It gives them an exit where they can walk away on the date of the sale and not think about the business again. They don’t need to keep working on an earn-out basis over a period of years, suddenly having to report to a third party who owns you if you have to keep working in the business for three years
“Reporting to other people would be hell for them, but they also wanted the business to carry on in the current format that it is, with the staff and how we do things, so it’s those two things combined that convinced them on the MBO.
“It’s not all about money and how much you can squeeze out of the business. They feel comfortable in the deal they’ve done, me and Steve feel comfortable in the deal that we’ve done and that’s how we’ve gone about things.”
The MBO means Walmsleys can continue as an independent broker and member of Brokerbility, and that they don’t join the wave of other members leaving after being acquired by a consolidator.
Wall says they take great pride in remaining members of the network, and that he and Moore have agreed when they want to retire they will seek to pass on the business through another MBO.
And he added: “Remaining independent means we can make decisions and change the way we run things here. We have our own style with clients which can sometimes be a bit quirky.
“It means we can sit in a room on an afternoon and come up with an idea, and then make that happen. That independence is key, and it means we can place in markets where we want to place. We can broke with complete impunity, and not feel coerced into operating in certain markets over others.”