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The acquisition feeler longtime Lakewood Ranch insurance executive Lou Marinaccio received a year ago from Arthur J. Gallagher & Co. wasn't his first go-around in the land of mergers and buyouts.
But the call from Gallagher & Co., a publicly traded $3.1 billion insurance broker and risk compliance firm with a client list that includes Boeing and Dell, was certainly different. This was the first time a larger company chased Marinaccio's firm, Lakewood Ranch-based MGA Insurance Group, from a perspective of entering new business lines, not adding to an existing portfolio.
Itasca, Ill.-based Gallagher & Co. courted MGA, which had $81 million in premiums in 2013, for the past year. Terms of the deal, announced May 27, weren't disclosed. “We didn't have to compete with their internal structure,” Marinaccio tells Coffee Talk. “We had something they did not have and they wanted it.”
That something was MGA's national leadership position in the niche market of selling insurance and benefits consulting services to independent insurance agents. MGA sells insurance plans and packages with features that include health, life and dental, plus professional liability, to agents who work for firms like Aflac, Aetna and Great American Insurance. Marinaccio has been in that field since 1984, when he founded MGA in Chicago.
Marinaccio says MGA, a 45-employee firm, has several other things Gallagher & Co. sought. One was MGA's priority on technology spending for software and hardware improvements. Another was MGA's presence in Florida, a market in which Gallagher & Co. would like to expand. “We continue to look for new partners that will add to our specialty products and services capabilities, expand our geographic presence and fit well within our culture, and MGA has all of these qualities,” Gallagher & Co. Chairman, President and CEO J. Patrick Gallagher Jr. says in a release.
MGA's niche and Florida location provided Marinaccio an opportunity to negotiate two key points in the Gallagher & Co. acquisition. One is the firm's name, MGA, will live on, under the “a division of Gallagher & Co.” tag. And MGA's Lakewood Ranch offices, which it recently moved into, will also remain the headquarters. Gallagher & Co. took over the leases, Marinaccio says. “They are huge,” Marinaccio says of his new corporate parent, which has operations in 27 countries, “but they have a very similar family culture to what we have.”
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