California-based private equity firm, HGGC, was founded in 2007 by Steve Young, Richard Lawson, and Lance Taylor. As three titans of industry, Young, Lawson, and Taylor had a firm understanding of what was expected of them as they pursued this undertaking. All versed in the dynamics of investing, Young, Lawson, and Taylor married their insight with their intrigue to develop what’s now one of the leading middle-market businesses in the industry. Armed with an industrious team of financial specialists, HGGC’s services run the gamut from recapitalizations to add-on acquisitions. They’re also proficient in leveraged buyouts and platform investing.
Seeking partnerships with founder-owners, management teams, and sponsors, HGGC feels like these individuals hold the most potential to transform into renowned portfolio companies. Collaborators to the core, HGGC’s team of experts strive to build harmonious business relations with their valued clients. Some companies they’ve recently invested in include AIMC and Integrity Marketing Group. Though Young, Lawson, and Taylor are exceedingly proud of the progress their corporation has made, they hope to extend beyond their North American roots within the foreseeable future. According to Young, their desire to diversify into an international corporation fuels their motivation.
While HGGC has performed exceptionally well in their domain, that doesn’t mean they’ve been without their setbacks. In 2016, the company was under fire for allegedly falsifying test results at one of their subsidiary companies, Citadel Plastics. A. Schulman, a supplier of plastic compounds, called Young and his colleagues out after acquiring Citadel Plastics three years ago. As the MD, the onus was on Young to keep this scandal under wraps. Unfortunately, A. Schulman ensured that wouldn’t happen when they filed a lawsuit. HGGC is still reeling from this three-year-old controversy. Fortunately, the company’s honorable repute was only temporarily sullied, and they continue to thrive in their field.
When HGGC announced in 2016 that it was funding the Davies Group, little was known about the deal. Financial analysts were left speculating about the possibility of further funding and even a merger. However, as the years went by, things have since come to the fore. It can now be said authoritatively that the funding involved acquisition of a majority investment stake in the company. The deal saw the managers of Davies retain their job although they would have to change their working strategy.
Using their networks
Because of this agreement, HGGC was going to leverage on the system already created by Davies which is based in London. This company has been delivering third-party administration services to insurance intermediaries. They also offer specialist technical services. Because of their existing customer base, they press more than 170,000 claims every year which translates to about £1.2 billion in annual claims. These claims include casualty, motor, property, and other classes of niche insurance.
A worthy deal
Although the details of the sponsorship were initially scanty, it later emerged through an announcement from Davies showing that they were thrilled to partner with HGGC. The company said that they hoped that this new frontier would present them with better business opportunities. They were aiming at growing their business through a new model that has prompted the signing of the deal. Specifically, the company wanted to add a few more services to their portfolio including specialty BPO services and international expansion. These two services were going to add to the already ongoing M&A strategy.
A statement from the HGGC team, after the completion of the signing of a deal, indicated that this was not an ordinary deal. Co-founder Rich Lawson said that Davies was not a third-party insurance administrator to ignore. He pointed out that they have been at the forefront of the provision of innovative services, and strategy that they also use.
While pointing out that Davies invests heavily in new technology, HGGC said that there would be no better time for a deal between the two companies. He also noted that they have been leading when it comes to new applications, an indication that they are the company of the future.