Chris Hall: QuestGates’ new investment will accelerate growth plans

Earlier this week (5 August 2024), loss adjusting and claims management firm QuestGates secured new investment from mid-market private equity firm Equistone Partners Europe. 

The deal, which saw Equistone become a significant minority stakeholder in the business, was completed to provide QuestGates with extra firepower to support the continuation of its growth strategy. 

But, speaking to Insurance Times following the announcement of the deal, QuestGates chief executive Chris Hall says: ”The whole plan of completing this investment is to grow. We will get bigger, but in a controlled way while doing the work that we do, not just via turnover.” 

QuestGates was incorporated in 2003 via the combination of two businesses called Quest and Gates and has since grown from a starting position of 40 employees to a firm with over 500 staff across 12 UK and Ireland locations and yearly revenue of £41m. 

Despite this growth journey, Hall says he and his management team were “determined to shake things up” with new investment.

He explains: ”The problem is always, when you get to 20 years with an owner managed business, that you become complacent or get too set in your ways. That, or everyone assumes you’ve got to sell and become part of one of the other adjusting companies.

“But frankly, we are enjoying what we’re doing and want to carry on growing a business that is focused and has a great reputation.” 

The terms of the new partnership with Equistone was carefully sought out by QuestGates’ management team to support this rationale, who Hall says were “adamant” that any investor must be in it for the long term and that debt must not be used to finance the share purchase.

Part of the deal has been that QuestGates’ management team will remain intact, with the addition of Equistone director Tristan Manuel and senior partner Dominic Geer to the board. 

The deal also involves no debt and, because of the minority stake owned by Equistone, does not allow the private equity firm to force an early exit. 

Hall adds: ”Private equity usually wants an exit date of three or five years, but we wanted someone committed to the long-term. Equistone have agreed to that and have been brilliant because they understand that we’re in this long-term.” 

He also notes the importance of Equistone insurance industry expertise as one of the initial backers of Admiral, as well as long-term investors in A-Plan, before it was acquired by Howden. 

Strategic focus

With its new financial backing, Hall says that QuestGates are now keen to accelerate some moves that were already in the works. 

He explains: “We always do acquisitions that either fill in a geography or add a service that we don’t already do. So, for example, we’ve added engineers, surveyors and a law firm and we want to carry on with that strategy. There are product lines that we’re not in that we’d like to get into.

”Acquisition, for us, is about getting that organic growth, rather than adding turnover. Engineering and surveying obviously isn’t loss adjusting, but it supports loss adjusting. That’s the diversification, because we use engineers, lawyers and surveyors, so why pay somebody else to do what we can be doing ourselves?”

A number of deals were already in discussion as the Equistone investment was announced, but Hall says there was some reluctance to complete those without the requisite financial strength. Now, however, he says the management team are “able to take a view that we can invest” and news should be forthcoming in the coming weeks and months.

He adds: ”With this new investment, we can be just a little bit more ambitious and a little bit quicker, while still being conservative.” 

That natural conservatism and commitment to sustainable growth also factored heavily into QuestGates’ decision over its new investor. 

Hall says that various capital providers approached the firm with the aims of “making QuestGates a £300m turnover business”, but that this did not fit the ethos or business model that had served it well. 

He explains: ”From our point of view, we’re more interested in being a premier brand than being a high volume brand. We don’t want to chase turnover, we want to chase margin.

“I regularly turn down high volume work by being honest and saying ‘look, I just don’t think it’s for us’. No disrespect to any of the big companies, but if you look at some of the high volume firms, there’ll be a lot more turnover, but not necessarily a lot more profit.”

“Plus, whether by luck or planning, the market has moved towards more what we offer. When we started 20 years ago the comment was that we’d have to chase high volume, but now that insurers can do a lot of that work themselves they need businesses that can complete high value, complex, technical cases like we can.”