The question
A mid-market fund was in the final round to buy Ashby & Lowe, a specialty insurance broker serving marine and aviation clients. The asking price was 11 times earnings. The fund had three weeks before final bids and asked us one question: is the growth in the seller’s plan real?
What we found
We spoke with 34 of the broker’s clients, competitors and insurers in 15 working days, and rebuilt the growth figures from policy-level data.
Two insurance carriers placed 58% of Ashby & Lowe’s premiums, and both of those agreements were up for renewal in 2027. Clients were loyal to the brokers they worked with, not to the firm, and three of the five top producers were within four years of retirement.
The seller’s plan showed 7% organic growth. Stripped of two small acquisitions and a one-off rate increase, it was closer to 2%.
The one page
The recommendation on day 19 was short: don’t buy at 11 times earnings. The page set out the price at which the fund would still make its return given the carrier concentration, and the two conditions (carrier renewals, producer retention agreements) it should insist on at any price.
What happened
The fund submitted a revised bid at a lower multiple with both conditions attached. The seller chose another buyer. Eighteen months later, one of the two carriers moved its marine business to a competitor at renewal.
We don’t count a deal that didn’t happen as a failure. "That was the cheapest three weeks we spent all year," the fund’s operating partner said.
Diligence turnaround measured from the data request to the board recommendation. We don’t report outcomes for companies our clients didn’t buy.
