Swiss taking reins of DTB brokerage

DAYTONA BEACH — A Switzerland-based global private equity firm has agreed to purchase a controlling stake in Daytona Beach-based Foundation Risk Partners.

The fast-growing insurance brokerage began here with just a single location in 2017. Today, FRP has 139 offices in 18 states and is on track to generate a record $500 million in revenues, according to Charlie Lydecker, the firm's founding chairman and CEO.

Lydecker declined to say how much Baar, Switzerland-based Partners Group is paying to acquire the 50% stake in FRP.

Industry trade publication Inside P&C and other publications reported that Partners Group's deal to buy the controlling interest in FRP resulted in a recapitalization of the Daytona Beach insurance brokerage for a valuation of more than $2.8 billion.

Partners Group announced its agreement to acquire FRP in a news release posted on its website. The deal was struck at approximately 3 a.m. on Tuesday and is expected to close in about 45 days, confirmed Lydecker in a phone interview.

"FRP provides us with access to the growing insurance brokerage market in the U.S., which benefits from stable non-discretionary demand and favorable tailwinds," stated Joel Schwartz, a partner and the co-head of private equity services at Partners Group, in the news release. "We have been tracking this market for several years and were attracted to FRP's diversified service offering and client base, as well as the transformational platform-building opportunity it represents.

"We look forward to working with FRP's very experienced management team on implementing the value creation plan."

Local investors still own 40% stake

Under the terms of the deal, Lydecker and the other local investors that helped launch FRP will retain a 40% ownership stake with Lydecker keeping his roles as chairman of the board as well as CEO of the company.

Warburg Pincus, the New York-based private equity firm that helped provide the initial capital to launch FRP, will retain a 10% stake. It previously owned a 60% stake.

Lydecker is a former executive with Daytona Beach-based Brown & Brown Inc., the nation's fifth-largest insurance brokerage, which also has seen tremendous growth over the years, thanks in large part to its strategy of acquiring smaller rivals and complementary businesses.

FRP was formed when it acquired two longtime area firms: Ormond Beach-based Mitchell Noel Insurance and Daytona Beach-based Reames Employee Benefits Solutions. The two firms had a combined annual revenue of less than $3 million.

Both today are subsidiaries of FRP. Mitchell Noel now does business as Halifax Insurance Partners while Reames Employee Benefits Solutions, which was founded by the late "Gator" Bert Reames, continues to operate under its own name.

Looking forward to 'next phase of our growth'

"At FRP, we pride ourselves on our industry experience, client commitment, and market-leading innovation," said Lydecker in the Partners Group-issued news release. "As we look to grow and break into new markets, we believe Partners Group's track record of building leading platforms, as well as its deep resources, will be highly valuable to the next phase of our growth."

Lydecker said FRP has grown to become the nation's 17th largest insurance brokerage, based on annual revenues which totaled $410 million in 2021.

Phil Trem is the president of MarshBerry, the Woodmere, Ohio-based consulting and investment banking firm that served as one of the advisers in brokering the deal with Partners Group.

"To grow this quickly in just five years is an amazing story," said Trem in a phone interview. "What's unique about FRP is how they've done it by creating a fully integrated and proprietary technology enabled platform."

Trem said that FRP sold for the highest multiple (on earnings) on record (for the insurance brokerage industry)," but declined to say on the record what that multiple was. "It's a testament to the great team at FRP and the business they've built."

Inside P&C reported that the deal for FRP was estimated to be roughly 17.5 times earnings before interest taxes, depreciation and amortization. The article also characterized the deal as a sign that "insurance fee businesses are continuing to defy gravity."

"Partners beat off competition from names including Blackstone, Leonard Green, TPG and TA Associations in what was a hard-fought contest (to acquire FRP)," the property-and-casualty insurance industry trade publication stated.

Sale is one of biggest-ever in Daytona

Kevin Manley is a Daytona Beach-based exit strategy consultant who helps businesses owners increase the value of their companies to potential buyers. While Manley has no involvement with FRP and has no inside knowledge about the deal with Partners Group, he said it is not difficult to make an educated guess as to how much the controlling stake is selling for.

"I would quickly do the math. Fifty percent of $2.8 billion is $1.4 billion. Fifty percent of the valuation is the formula," Manley said. "It's got to be one of the largest transactions for this area, at least the largest anybody knows about."

Manley added that it is no surprise that the greater Daytona Beach area is home to not one, but three fast-growing national insurance brokerages: Brown & Brown, FRP and Lake Mary-based AssuredPartners. The formation of both FRP and AssuredPartners were led by former executives at Brown & Brown.

All three follow the model of rapid growth in part via the acquisition of smaller competitors in other parts of the country.

"Success breeds success," said Manley.

FRP employs more than 1,800 people nationally including 100 at its Daytona Beach headquarters in the Cornerstone Office Park, just east of the Interstate 95/LPGA Boulevard interchange.