‘We are a cash-in type consolidator, we don't buy fixer-uppers,’ says McManus

PIB chief executive, Brendan McManus has said that he has had a lot of companies approach him, wanting to be bought, but he has turned them away.

Speaking on a panel at the MGAA conference in London, McManus said: “Most MGAs we see come up for sale are there because they have a problem with capacity.

“That could be because of a lack of due diligence from capacity providers in the past.

“We don’t want to buy fixer-uppers, we want to work with a company we can invest and collaborate with.”

“I think capacity providers should have much more rigour when giving out their capacity. I think it should be much more difficult for MGAs to get capacity.

“When those relationships are short term because there has been a lack of due diligence, that could be very disruptive for the customer.”

What to look for when making an acquisition

When explaining what he looks for in a business to invest in, McManus said he wanted “quirky, geeky companies with quirky, geeky people.”

”It needs to as specialist as possible. But the quality of the people is important.

“If I can have them around my house on a Saturday night, then I could probably work with them. We insist that vendor roll over at least 20% of their proceeds into the top company. That means they are investors in the overall group, which means they are more likely to collaborate.

”We are not a ’cash-out’ type of consolidator that will just buy your business and cash you out on day one. We are a ‘cash-in’ consolidator.” 

Catherine Bell, chair of iNet3 echoed McManus’ ‘Saturday night’ point.

“Whoever said business is not personal got it terribly wrong. It is personal, the people are in that business and come on that journey with you.”

Home-built platforms?

Chartered Insurance Institute (CII) chief executive, Sian Fisher chaired the panel, and she put to Brendan those MGAs who had successfully built their own platform and utilised it for many years, but McManus said he would rather work with companies who used industry standard platforms rather than ones “home-built”.

“I think companies using industry standard platforms will have more value than ones who rely on home-built technology and have to rely on Colin from IT who is sat in the corner and all the IP is in his head.

“Eventually, Colin is going to disappear. So I would like to see the IP embedded in the business.”

Bell disagreed with McManus: “I understand where Brendan is coming from but faced with a decision whether to embed technology into our own business, 12 years ago there wasn’t a market solution we were looking for.

“If we went to a service provider, because we were a small business at the time, we wouldn’t have been top of their list of priorities. So we took a decision to start with a blank sheet of paper and build our own, and I am so glad we did.

“In hindsight, maybe if we had to make that decision now, it would be different.

“But want control, I don’t want a third party dictating when we can do things.”

What next for PIB?

Since its inception three years ago, PIB has bought 18 UK companies, four of which are MGAs.

He hinted at what his next move could be.

”My next project is to take the intellectual capacity we have from the UK and look at the MGA space in Europe.

But when presented with the Brexit complications, McManus said he has made precautions.

”No one really knows what Brexit means at the moment. But I have made preparations that will allow us to operate in Europe no matter what the outcome.

He then hinted at moving the top company to Ireland.

”With a name like Brendan McManus, you could probably guess where we are going to go if we have to.”