Earlier this week saw the release of Aston Lark’s full-year 2019 results, the first set of financial results revealed since Goldman Sachs Merchant Banking Division took a majority stake in the firm in September last year. While it is rewarding to see these results, which saw revenue increase by 25% year on year to £71.6 million, said group CEO Peter Blanc (pictured), it is also a little strange to revisit them as the business is mentally moving on and already hard at the work that will allow it to create even better results for 2020.
Read more: Aston Lark reveals financial results
The year end results for the group revealed a careful blend of both organic and acquisition led growth and Blanc stated that this combined strategy will continue to be the core focus for the brokerage. There is a strong awareness within Aston Lark that there is no point in buying businesses if you are going to be pouring them into a leaking bucket, he said, and so, first and foremost, the emphasis is on being an organically growing business.
“If we didn’t buy another business, I’d expect us to carry on growing year in, year out,” he said. “So, that has to be our number one goal. And then it’s a case of adding selective acquisitions that really help us to accelerate this journey and also to increase our skill set and increase our specialisms.”
With organic commission and fee growth increasing by 3.4% in 2019, Blanc noted the impact of Aston Lark’s high retention rates, which come down to the high level of service that staff provide to clients. Where the broker has been changing, however, and has managed to substantially improve, is in cross-selling and making sure that the value of its customer base is optimised.
“We’re quite unique in that, as well as having a big commercial insurance operation, we’re one of the strongest private client brokers in the UK and also have a big employee benefits business,” Blanc said. “So, it’s just about joining the dots and making sure we’re talking to our commercial customers about their directors’ household insurance and private medical cover, and talking to our high net worth customers about their private medical. We’re making sure we’re asking clients about all their insurance requirements and not just what we happen to be doing at that moment. And those cross-sales to existing clients have been one of the main drivers of organic growth for us.”
In conjunction with this organic growth, 2019 was also a busy year on the acquisition front for Aston Lark, with six deals secured during this period, and 2020 shows no sign of slowing down. Blanc noted that the business currently has an exceptionally busy pipeline, with another six to seven deals currently in the due diligence stage. With several deals all vying for completion in September, the next few months will likely be very busy, and there is no signing of this letting up anytime soon.
“We’re getting lots of inquiries and we expect to complete five to 10 acquisitions a year. And so, we will certainly be in that bracket in 2020 and, judging by our pipeline I’d say we’ll be at the upper end of that in 2021,” he said. “Funnily enough, on the acquisition front, I think the pandemic has helped us to be more efficient. Whereas before I could be travelling hours to talk to a new broker, now I can see multiple acquisitions in [various locations] all in the same day without leaving my office. It’s made the opportunity for us to look at more acquisitions even more possible.”
Following the end of the pandemic, Blanc believes that many of the digital processes Aston Lark has embraced will have continued applications for the business both on the client side and on certain elements of the acquisition side. He noted, however, that while a great deal of preliminary work involved in acquisitions can be done digitally, a face-to-face element will always be essential when it comes to onboarding an acquired business.
For Aston Lark, the focus is still on a culture-first acquisition strategy, he said, and the business is looking for client-centric brokers who want to be part of a business with a similar ethos. As Aston Lark has grown it has become much more flexible about the type and nature of the acquisitions that it does and nothing is ever off the table as far as the structure of a deal goes, but the only non-negotiable factor remains that cultural fit of putting the customer first.
