Blog: It is way too early to declare Gallagher or Towergate the £20m winner


It is perhaps an indication of the ‘now-now’ world we live in that so many people were happy to crown either Towergate or Arthur J Gallagher the ‘winner’ last week following the £20m settlement.

Following the announcement, a host of brokers - some happy to be named, others offering a voice under the cloak on anonymity - came down on one side or the other, seemingly based on whether they thought £20m was a lot of cash for a management team - no matter how high profile - or a good deal for a ‘proven' group of bosses.

Personally, I think it is way too early to declare either side a winner; or indeed if anyone has ultimately come out of the whole affair in a better place than before.

For AJ Gallagher, it still has the same challenges it had before Ross, Deakin, Mugge, Brown et al jumped ship, namely, to integrate the fruits of its recent spending spree into a homogenous and well-drilled profitable broking group with a common culture and aims.

On the other side, Towergate needs to prove to its latest investors that their faith is well placed in the consolidator, having relieved it of a chunk of debt.

If Gallagher succeeds in pulling the disparate parts together, with its new management team pulling everyone together, then they will be happy. The extra £20m in the bank will be seen as a bonus.

For Towergate, there will be some who are wary of the latest big name signings as we have been here before with the likes of Snowball and Hodges from Aviva ultimately proving unsuccessful. But if the ex-Gallagher mob come in and help improve its EBITDA whilst de-leveraging the broker, £20m might seem a small price to pay for finally getting the business back in a position where people no longer prefix the name Towergate with ‘troubled' or such words.

For all intents and purposes, if both businesses achieve their aims, they could both be crowned winners. The question remains though - back to the ‘now-now' point above - how long will it be before either side can be declared a winner, loser or neither?

Already there have been mutterings that the Towergate team have been given two years to turn it around - a year less than Hodges had - which seems slightly strange given the predicament and amount spent in hiring them.

But perhaps they have been taken in by the fact RSA has apparently gone from basket case to potential shareholder bonanza in under 24 months as a barometer of success in the insurance space?

For Gallagher, I am sure many within the Walbrook building know that it is football transfer deadline day today in Britain. And as with those teams scrambling around to do last-minute deals, they will be aware it is all very well having money in the bank; it is how you spend it that matters.

Just ask Tottenham fans: Would they rather have Gareth Bale back in the team, or the £85m they banked for his transfer?

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