Up on the Heath

Once again, the “For Sale” sign has been hoisted above Heath Lambert.

The difference, this time, is that it is high enough for all and sundry to see.

Despite the ongoing feast that is consolidation, few brokers have attracted as much interest as Heath.

Fewer still have attracted as much speculation.

Talk began in earnest when the company controversially broke off discussions with JLT in July last year. Over a year on, and coinciding with the release of its six-month results (which are, by all accounts, most encouraging) the appointment of Hawkpoint as “financial advisers” has raised speculation to fever pitch.

The difficulty is the move does little to decloud the crystal ball; in fact, it could do quite the opposite. What is certain is that people in the market are talking about it.

On the acquisition trail the usual suspects have been banded about: AXA, Allianz, IAG and, of course, Towergate. Private equity, with its heightened activity in the sector in recent months, has naturally been thrown into the mix. With the management holding a sizeable stake in the company, theories of MBOs abound, while floatation also remains very much in vogue.

Most likely, however, is the reported interest of American broker giant Gallagher. Desperate to gain a foothold in the UK market, they have both the greatest motive and the deepest pockets. And, with Heath Lambert’s strong commercial distribution base, they fit Gallagher’s target criteria quite snugly.

The price? £100m at the very least.

Distinguishing truth from rumour, there can be no doubt that the business is an attractive target. Having centralised its business at one London location, restructured its national and wholesale teams, and flogged off its French subsidiary LSN for £10m, the company has revealed a year on year jump in pretax profits of 19% to £10.2m.

As a result, there is another – albeit slightly less glamorous – outcome: growing the business through refinancing. Heath Lambert CEO Adrian Colosso has indeed said that the company plans to expand its retail broking division – a significant move towards diversifying the business. The next eighteen months could be the time to do it.

Colosso said: ”We need to expand our business further and grow. Organic growth alone is a challenge for all organizations our size, especially given the current market conditions.”

It may be the old chestnut, but in Heath’s case – and for wildly different reasons – such a statement might just end up ringing true.

Until then, all bids are off.