ELECTRONICALLY REPRINTED FROM APRIL 2017
Alera
Group
The
One of the largest multi-line
commercial brokerages didn’t
exist last year. Here’s its story.
BY FIONA SOLTES
FAST FOCUS
>> From its start in 2002, the
Benefit Advisors Network
was designed to share best
practices and collaborate for
mutual benefit.
>> Alera Group is composed
of 24 entrepreneurial
insurance and financial
services companies from
across the country.
It was June 2015 in Philadelphia, and the time had come to fish or cut bait. The
conversations, the questions—the possibilities—had been murmured about for years.
>> Alera began in January as
Even as the Benefit Advisors Network had grown, every time the group gathered,
one of the largest privately
held multi-line insurance
someone else had sold. Consolidators had continued to approach. Challenges for
brokerages in the country.
individual firms had ramped up.
From the very start in 2002, the point of BAN had been to share best practices
and collaborate for mutual benefit. But that day, a whole new level of collaboration was on the table.
The 20-odd people in the room were committing to merge their firms, even while maintaining a sizable
ownership stake, and to collectively take on a private equity partner to grow their companies.
The invitation had been open to all, but those gathered had committed to step up—and step together.
One by one, they stood to say why.
“The men and women there spoke to the interest of improving their firms, of working at a much
deeper level with the peers they had held in such high regard and admiration and collaborated with
already,” says John O’Connell, president of C.M. Smith Agency. “I think it was Alan Levitz who said,
‘Holy smokes, no one said they’re here for the money.’… It was an incredibly inspiring moment, because
it set our true north.”
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ACQUIRING MINDS
“To draw the distinction, this was the absolute opposite of an
exit strategy or sellout. It was critical to our decision-making
process as a group that we needed to be focused on really
building a great new company and not just having some sort
of monetization event and fading into the mist.”
—John O’Connell, president, C.M. Smith Agency
NUMBERS CRUNCHER • ALERA GROUP
20,000
750
24
$158 million
40 15
clients
employees
firms
in revenue
locations
across
states
GOAL: Exceeding $500 million in revenue
OWNERSHIP: 40% member firms;
60% Genstar Capital
INITIAL MAKEUP: 75% employee benefits firms;
15% p-c firms; 7% wealth management/financial
services firms; 3% other
FIVE-YEAR GOAL: 45% employee benefits;
45% p-c and risk management; 10% wealth
management/financial services.
The compass had landed on
what would become Alera Group,
a brand-new employee benefits,
property-casualty, risk management
and wealth management firm with
investment from Genstar Capital.
Composed of 24 entrepreneurial
insurance and financial services
companies from across the country,
Alera came out of the gate in
January as the 14th largest privately
held multi-line insurance brokerage
and seventh largest privately held
employee benefits firm in the
country. Levitz, who was CEO of
GCG Financial, has taken the helm
as Alera Group president and CEO.
“To draw the distinction, this
was the absolute opposite of an
exit strategy or sellout,” O’Connell
says. “It was critical to our decisionmaking process as a group that
we needed to be focused on really
building a great new company
and not just having some sort of
monetization event and fading into
the mist.”
The landmark partnership
addresses many issues agency
owners face, from perpetuation
concerns to risk. And in the bigger
picture, O’Connell says, “as the
market gets more sharp and pointed
in its demands, just as in any
other industry, having scale and
scope and a DNA of innovation is
critically important.”
AN OPEN-BOOK PROCESS
It’s essential to note that BAN
continues on. Earlier this year,
in fact, some 300 BAN members
gathered in San Antonio, and
Alera owners took part. It’s not
a replacement in any way but
rather, as Levitz puts it, “a logical
evolution.” BAN began as a study
group and became a shared services
platform. Next, there was some
sharing of financial compensation.
The Alera deal, however, includes
accountability around using the
services that are on the platform
and continuing to build together.
The process, says O’Connell,
who serves as BAN’s vice president,
“was very open-book. It was not
selective in any way. What I mean
by that is we didn’t handpick firms
that might have been a little better
performing or higher growth. It was
open, and anyone who chose, they
could learn all the way through.”
And Alera still promotes partnership
opportunities.
BAN includes roughly 70 firms.
Those that chose not to become
part of Alera had their reasons.
Some firms have multiple owners
or strong internal perpetuation
strategies; others weren’t interested
in looking at an alternative capital
structure. Some had an employee
stock ownership plan. And still
others thought it might be a
daunting project, requiring much
time and energy. (And that last
subset in particular was right.)
“But overall, of the 24 firms
that are part of Alera Group, 20 of
them were initially part of Benefit
Advisors Network, and they had
a history of working together
through their owners, through their
salespeople, through their account
executives, very closely over the last
12-plus years,” says Rob Lieblein,
Alera’s chief development officer.
“Not only was there trust involved,
but they thought about the world
and business and strategy the same
way. So when the opportunity came
about to consider coming together
as one, there really was a strong
foundation in place.”
As for the other four firms, they
were all firms Lieblein had been
in relationship with while working
with consulting and investment
banking firm MarshBerry.
Throughout BAN, however, “I
think there was a curiosity,” Levitz
says. “A skepticism, certainly.
Concern. And on the other side,
an optimism and a wow factor
to the whole set of discussions.
To pretend that all of us weren’t
ACQUIRING MINDS
“We have evidence of a ton of sales activity just since
we all came together. And we’re already working much
more closely than even as a BAN firm we would have
done, just because of the accountability.”
—Alan Levitz, president and CEO, Alera Group
TIME AND INTENSITY
Back in 2014, the board of the Benefit
Advisors Network, as a member-driven
organization, first approached Lieblein
about coming up with an alternative
business model for firms to join. He had
strategies ready to present at the start of
2015. It took about six months, Lieblein
says, for the individual firms to grasp what
Alera would be, how the private equity firm
would be involved, how debt could be used
and what ownership would mean. Next up
was the process of building vision, strategy
and objectives, followed by six months’
worth of due diligence, legal agreements
and conversations with lenders.
Because the move was unprecedented,
because so many firms were involved,
and because none of those firms had been
through any venture of this scale, wheels
turned slowly. Most initially believed the
process would take months rather than
years.
“It was a challenge keeping everybody
enthused,” Lieblein admits. “It was a
major time commitment for every single
person in each firm to stay together for
“Someday, someone will write a novel
based on my life and reveal how I was secretly
a nice guy but no one had any idea.”
© 2017 Ted Goff
someplace on that spectrum at some
point during the conversation would be a
mischaracterization. We all went through
the process of trying to understand it,
what it meant to us as people, what it
meant to us as firms, what it meant to our
people, and what it might mean within the
industry.”
And they all went through the process
of wondering just how long it would take.
two years and give 100% effort to this, as
well as 100% to their businesses. To their
credit—and I think this is an important
point—the 24 firms, between 2015 and
2016, grew 8%, which is almost double the
industry average. It was a Herculean effort
by everybody involved.”
Those who made that effort speak
of intensity, of complexity, of trenches,
and calls and talks and work groups
and meetings. But they also speak of
community, like-mindedness and a culture
of collaboration that pulled them through.
“What was a pleasant surprise for me
… was the ability of all of the owners,
who are great entrepreneurs, to check their
egos at the door to get a deal done,” says
Peter Marathas, Alera’s chief legal counsel.
“I don’t think I’m overstating it to say we
never had any type of issue where we had
to rein anyone in. Everybody had a singular
view and worked together to get there, to a
great result.”
Alera aims to create a national platform,
administered regionally, deployed locally.
As such, each firm retains its local brand
equity but can use the Alera name to bring
national presence and heft. Collaborative
opportunities among peers have increased.
“We have evidence of a ton of sales
activity just since we all came together,”
Levitz says. “What’s been really great is
the number of collaborative sales—I can’t
say have been made, but are being talked
about—within the firms, where one firm
might have a prospect that’s in another
firm’s sweet spot. And we’re already
working much more closely than even
as a BAN firm we would have done, just
because of the accountability.”
Yet, so far, not much has changed on a
day-to-day basis for many of the employees
of the individual firms. “Other than the
fact that now we’re allowed to dream a
little bigger,” says Bill Brown, a partner at
Ardent Solutions and one of eight Alera
steering committee members. “Whenever
we would have a great idea before, it
would fall on someone locally to either
develop that expertise or find that funding.
Now we have a greater opportunity, just
because of the experience and the resources
financially, to build it.” The way of the
past might have been to temper creativity
with too much reality, he says, but the
way of the present is to talk about building
something bigger than the individual firm,
and bigger than Texas. “Let’s tackle the
ACQUIRING MINDS
“What was a pleasant surprise for me ... was the ability
of all of the owners, who are great entrepreneurs,
to check their egos at the door to get a deal done...
Everybody had a singular view and worked together to
get there, to a great result.”
with each other through BAN over a
number of years,” Clark says. “It was clear
to us that this was something special and,
if any group of companies could pull this
off, there was that spirit in the room that
first night, at that first dinner. And in the
meeting the next day, it was palpable that
this group of people could do it.”
—Peter Marathas, chief legal counsel, Alera Group
that it wasn’t a big issue and here’s what
we’ve done and here’s who we are and
here’s how we think…. Genstar believed
us.”
It wasn’t that the company would come
first and the culture second. The culture—
one of collaboration, openness and the
desire to positively impact clients and
communities—was already well in place.
Ryan Clark, president and managing
director of Genstar, says by the time his
firm came on the scene, the culture and
shared vision was evident.
“At our first meeting, we had a dinner
with principals from maybe half of the
companies, and you could tell the common
sense of spirit, the camaraderie, the mutual
respect they had for one another, the
engagement that comes only from working
“Oh, stop making everything so serious.
Can’t we just have a fun performance review
for once?”
© 2017 Ted Goff
biggest questions and not necessarily just
our community or local issues.”
The involvement of Genstar, naturally,
helps make that a possibility. Brown—who,
like the others, never doubted for a moment
that Alera would come to fruition—says
that of all the equity partners the group met
with, Genstar was the one that caught the
vision and the enthusiasm.
“Whenever we started talking with
Genstar, everyone was on the front of
their seats,” Brown says. Other potential
partners still viewed the individual firms
as “24 separate companies,” he says, “and
they just could not understand that we
had already built a culture and were now
building a company.”
When others brought up the challenges
of integration, Brown says, “we kept saying
THE SHARED VISION
Part of the shared vision was a belief in
the distributive equity model. Many who
were not owners in the individual 24 firms
became owners in Alera Group. There are
people in almost all of the firms that now
have equity interest, Levitz says, and will
share in the upside of any appreciation.
“The bottom line is that the current owners
of the new firm in total own 40%,” he
says. “While certainly there was a financial
transaction where Genstar was buying
60%, we are heavily invested in the new
company, and we think the vast majority of
our compensation from doing this deal will
come from whatever we can do over the
next five years rather than what we did in
the past.”
Because the large majority of the firms
had already worked together through BAN,
there was no need to immediately integrate
computer platforms or other technology.
The partnership with Genstar, however,
means firms that might not have been able
to invest in building their business in the
past will likely have greater opportunities
in the future. Alera’s level of accountability
and trust means if the group collectively
decides to implement a shared platform, for
example, once the discussions end and the
decision is made, there will be 100% buyin, Levitz explains.
Levitz and GCG Financial got involved
in 2015, adding weight and validation to
the effort. (As Levitz became CEO of Alera,
his brother, Rick Levitz, who has been
GCG’s president of wealth management,
became the firm’s managing partner.) It
didn’t take long for the group to recognize
Alan Levitz was the natural choice to lead
Alera. Besides his ability to “wrangle” the
entrepreneurs and make every meeting
productive, as Brown puts it, Levitz had
a different perspective with experience in
benefits, p-c and wealth management.
“I think, even to this day, many of the
benefits firms are still a little myopic around
benefits,” Levitz says. “They’re having to
remind themselves we’re going to be much
more than just a benefits company…. I was
involved in running a business as opposed
to running a practice.”
Alera certainly could have been just
a benefits company. “But I don’t think
we ever really considered it, to be quite
honest,” Levitz says. “We already have $25
million, in round numbers, of
p-c revenue.”
Adds Lieblein: “I think the market is
still coming to grips with 24 firms coming
together as a single entity versus just being
loosely tied together in some way…. Some
of the smartest people in the industry have
tried to do this for so many years and never
have. So why would this small group of
people—many of them they may not even
have known—be able to pull this off? A lot
of times I find myself, particularly in talking
with industry consultants, explaining what
happened, and it’s like, ‘OK. Now I get it.
It’s not what I thought was taking place.’”
One other thing that didn’t take place:
24 individual deals. “That probably
would have created a lot more of the
challenges we were afraid of all along,”
says outside legal counsel Mike Harrington
of Harrington & McCarthy. He rep-resented
Alera Group firms with Genstar’s legal team
of Ropes & Gray.
“These were individual deals packaged
together as a single deal, and we were lead
transaction counsel,” Harrington says. “We
also had the assistance of a bunch of the
firms’ trusted advisors as well, to deal with
the individual situations on a case-by-case
basis. The deal terms were largely the
same, but that was the way we settled upon
it, as far as the challenges and numbers.
That was really the way to do it. All the
facts and the history that goes along with
each of the individual firms were different,
obviously, but we settled upon a process
where we could look at these in a very
similar—if not the same—light in terms of a
legal acquisition and sale document.”
LEAVING A LEGACY
Looking back now, O’Connell says the
process has afforded an opportunity to see
things from a different macro perspective—
including that of an investment thesis.
Learning the pros and cons of the industry
overall, he says, “was very, very eyeopening.”
“In that context, there’s plenty of room
across the continuum of the business for
big players, medium players and small
players,” he says. “But I think we’re seeing
a sharpening of competition and focus
within the advisory space.”
The practice of simply providing a
renewal and a spreadsheet to clients once
or twice a year has long been dead, he
says. Small boutique firms that hope to
succeed must have very deep and narrow
areas of focus. But multi-line firms must
be bigger and stronger, with a “very broad
array of tools and outcomes to deliver to a
client. If you don’t, then the market is very
punishing.” Alera, then, is right on trend,
and those involved say they wouldn’t be
surprised if others see how it works and
decide to follow suit.
As for Levitz, he speaks of the biggest
surprises so far: the level of support for
each other, for the overall effort and for
him—as well as Alera Group’s ability to
pull Lieblein to “the other side.” Until
March of last year, Lieblein was executive
vice president at MarshBerry. (Billy
Corrigan, the former chief financial officer
for the international division at Marsh,
rounds out the Alera leadership team as
chief financial officer.)
“All of us have an aspirational goal, and
mine was to leave a legacy,” Lieblein says.
“I left a great career to join the other side,
and it’s really, really exciting.”
There was no “other side” for chief
counsel Peter Marathas, the managing
partner at Marathas, Barrow Weatherhead
Lent. His new role is similar to what it
has been for many years. “Just more
concentrated,” he says, “and a hell of a
lot more fun. The first Benefit Advisors
Network meeting I ever attended, there
were seven members jammed into a small
conference room down in Florida. The
invitation to me was, ‘Come hang out with
us, make some friends, talk about what’s
going on in the industry, but don’t expect
to be paid because we can’t pay you.’ But
I met with those folks … and it became a
wonderful relationship for me.”
As an employee benefits attorney,
Marathas’s role has long been to provide
compliance support. But his counsel
has gone far beyond insurance issues
to include guidance on a wide variety
of business issues. “So when serious
discussions began about a group of BAN
members forming together to become one,
I was part of those discussions from the
very beginning,” he says.
Brown, meanwhile, at age 38, talks of
the tremendous mentoring relationship
that Levitz has offered and the benefits of
working so closely with others he admires.
As the entrepreneur—and the son of an
entrepreneur—he’s always had multiple
mentors and a love of business in general.
“But I don’t know that I appreciate yet what
it means to not be the owner,” he admits.
“That’s probably going to be learned….
There will be some tough times ahead and
there will be some lessons learned, but
for the time being it feels like all 24 of us
got exactly what we hoped for. Sometimes
that’s bad, and sometimes that’s amazing.
Be we just couldn’t be more excited to
share our story.”
So far, those involved say that, when
sharing that story, they’ve received support
and encouragement from firm members
and clients alike. Granted, there will always
be those who will “wait and see” how it
all shakes out, but Levitz points to two
already-present positive signs: organic and
inquisitive growth. Both, he says, have
been “phenomenal.”
In terms of acquisitive growth, Levitz
says the sheer number of conversations
Alera is having with other firms is
“tremendous.”
“There are people who are interested in
what we’re doing,” Levitz says, “and there
are people who are interested in making it
successful internally.” As for the clients, he
says, “They’ve just heard nothing but great
things. They like this national platform that
we can all draw from yet still get the same
local service that they’ve all been used to.”
And at Alera’s core, that’s what it’s
really all about: “I knew I was in the
right place and doing the right thing
when ultimately, at the end of the day,
this was about better serving clients and
transforming the client experience,” Levitz
says. “When there’s clarity in vision,
success is not far behind. I think that’s the
place that we see opportunity. We don’t
have to work at deciding what we’re going
to be or what we’re going to look like. We
know what that is. Now, the market will
move things, but in general, we know
what we’re going to look like. Now we just
have to go about the business of making it
happen.”
Soltes is a contributing writer. [email protected]
Copyright © 2017 Leader’s Edge Magazine. All rights reserved.
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