Why is there a reluctance for mergers and acquisitions
among brokers? asks 
Jeremy Hall of
WestWon Limited.


Buying a leasing company is
normally the reserve of multinationals with deep pockets and grand
plans. Regardless of their international market or domestic
consumer strategy, the quick and cost-effective policy is often

What about the strategy of
the smaller broker? Organic growth? Buy and build? A mix of

Brokers acquiring other
leasing brokers is nothing new. Syscap acquired Exclusive Benefits
in 2010 after buying Professional Finance and Leasing in 2000. Wyse
Leasing bought Information Technology Rentals in 1998 and Premier
Finance and Leasing bought Sir Clive Woodward’s leasing business
Sales Finance Limited when he changed to rugby coach.

Some larger brokers have been
bought by lessors such as Wyse Leasing (CHG), Admiral Leasing plc
(Universal Leasing) and Leasedirect Finance (75%, Investec) but,
given the size of the broker market and number of companies, very
few acquisitions take place.

Most brokers run a lifestyle
company and grow by recruiting a few more employees and suppliers.
They assume there is no value to buying a company when they can get
the customers for ‘free’ via organic means.

“We will wait until they go
bust, recruit their staff and poach suppliers – there is no need to
buy,” is a common statement I hear.

“What is there to buy?” is
another classic line, and, in too many situations, all too true.
With no end-of-term income, own book, or signed supplier trading
agreements, what value can you attach to a broker?

Few brokers want to sell
their business and even fewer actively look to acquire. Many
brokers have nothing to sell other than good customer relationships
and when presented with a financial offer that might be just one
year’s profits, it does not make it a viable proposition. With
apathy from business owners not looking to buy or sell, M&A
activity will remain silent.

Many of the deals I have been
involved in are where the business owner looks to exit the
industry, their company folds or they have had enough. The sale
price reflects their current circumstances and view on the market,
which in layman’s terms means cheap. There are not many brokers
being sold to another broker for a significant price.

And in answer to ‘buy or not
to buy’, well, I will leave that up to you to decide.

Jeremy Hall is CEO of
WestWon Limited