Joe Henderson’s new broker is a direct rival to Aon - and there are consequences
By Content Director Saxon East
Legendary management consultant guru Peter Drucker said ”culture eats strategy for breakfast”.
Joe Henderson believes he has the culture to make his new business a success.
Aon paid a handsome £65m for Henderson Insurance Brokers.
Henderson, in his 70s, could have walked off into the sunset and retired.
Instead, Henderson is now setting up a rival broker to Aon.
Furthermore, his senior staff are brokers who have now left Aon-Henderson to join him at his new broker.
Supporters of Henderson would argue this is fair play.
Staff are free to choose wherever they want to go once contracts are honoured. Customers can greatly benefit from a new business creating healthy competition to Aon.
For Aon though, this probably leaves a sour taste in the mouth - to watch its staff end up with Henderson, an individual who received millions from them for his business.
Consolidation risks
Leaving aside the rights and wrongs of the new venture, Aon is having an erosion of shareholder value in this deal.
That is always the danger in consolidation - that staff leave and set up a new business around the corner once covenants are finished.
This is why Gallagher talks so much about culture.
Aon is so vast, it can brush aside these issues with Henderson without even blinking.
Gallagher is a strong business generating healthy free cash flow, but it doesn’t have the size of Aon.
Its deal sizes in the UK, of around £250m to £300m, are a considerable part of its investment spend and vital for growth.
Gallagher can’t so easily afford to have its staff leave after a few years to set up rival firms.
This is part of the reason the broker stresses that deals must have the ”right cultural fit”.
GRP, Aston Lark and PIB all have these issues to contend with too, although they are making smaller acquisitions, so it is not quite the same bracket as Aon, Marsh and Gallagher.
Drucker’s advice may be decades old, but his words still ring true today. Especially for broking, culture is everything.
No comments yet