Reference Number: HGM348
Status: Offers invited
- Outstanding opportunity to acquire a company that has developed a class leading commercial lines E-Trading Platform already adopted by some of the biggest companies in the commercial lines space.
- The company consists of a long standing experienced development team who have continually focused on both the evolution of the E-Trading platform but also the speed of implementation for the platform, reducing the time to market, empowering their customers to meet the demands and keep pace with the digitalisation within the general insurance sector.
- The company offers customers differentiation in the marketplace by providing comprehensive service, of designing and implementing their tailored technology platforms exclusively for substantive commercial lines insurance companies and brokers looking to grow their online channel, increase distribution, or benefit from automating costly administration.
- Having been a pioneer at the outset of E-trading and with 20 years of established experience, the company provides specialised technical and creative solutions and an in-depth knowledge of the industry.
- The company is an industry leader in a maturing digital sector, resulting in a high demand for their services despite the company never having undertaken any proactive sales and marketing. They are in a position to rapidly grow against their established position and whilst the company is growing organically, if they were acquired by a company with a significant sales and marketing channel the potential of the platform could be realised and rapid growth achieved.
- The company currently services more than 15 blue chip clients within the insurance industry, with a diverse range of other insurance clients in the pipeline. Prospects are excellent and contracts are in place.
- Forecast sales revenue for the financial year to December 2018 £1.25m assuming no sales and marketing effort, and conservative estimates for 35-40% growth in 2019 assuming sales and marketing effort was applied.
- Revenue elements are a combination of upfront capital/product costs plus recurring revenue elements. Recurring revenue accounts for more than 75% of total current revenue and the platform is now mature enough to promote a licence fee part of the financial model, and this has already commenced.
- The company would represent an excellent opportunity for either an insurance company/brokerage looking for a digital partner and who can adopt the proven platform/capability for their own exclusive use, or a software provider looking to enhance their footprint in the insurance space or diversify into it.
- Design and implementation of tailored web based technology platforms for commercial lines E-Trading
- Back office administration
- Supports B2C, B2B, wholesale, agents and affiliates
- Traffic generation programs and support packages
- Full product lifecycle self-service for customers
- System and workflow for underwriters
- Transference of existing book of business
- Comprehensive management information
- Ongoing support
- Secure hosting, MI and SEO
- There are 2 shareholding directors and 13 employees as follows:
- 10 Permanent Developers
- 1 Support person
- 2 Administration staff
- 2200 sq. ft. of office/meeting room space over 3 floors
- No long-term lease commitments
- Rent of £1,500 per month, plus £750 per annum service charge
Reasons for sale
The Directors feel that having overseen the critical development of the technology platform and established an excellent position within the commercial lines sector, the company is now perfectly poised to accelerate growth through acquisition by a larger company that could overlay the necessary resources to achieve critical mass on the platform.
One of the directors is beyond retirement age but would support a short handover and the other director would support any reasonable handover of the business as requested by the acquirer.
The company sold assets in 2016 related to their personal lines insurance platform so whilst previous accounts are available, the historical trading performance is not relevant to assessing the future potential of the commercial lines platform and acquirers should make a value judgement based on:
- The robustness and sophisticated functionality of the proven platform and IP
- What it would cost to create the platform capability from a standing start and the potential business disruption to implement this
- The potential when integrated into the acquirer’s infrastructure and driven by proactive sales and marketing effort
- The quality and capability of the development team