Earlier this year, U.K.-based Charles Taylor, a provider of technology services to the global insurance market, announced it had acquired Herrera DKP, a loss adjusting firm in Peru. Five months earlier, Charles Taylor acquired Underwriters Safety & Claims, a third-party administrator and managed care services provider in Louisville, Ky. And in January, the British company bought Contego Investigative Services, a nationally licensed counter-fraud and investigation services firm based in Orlando.
What’s the significance of this six-month shopping spree? Charles Taylor is owned by private equity firm Lovell Minnick Partners, which acquired the U.K. company in early 2020. Charles Taylor fits nicely into LMP’s portfolio, which includes insurance technology and financial technology platform companies, wealth and asset management businesses, and other related services. In June, for instance, LMP acquired a majority stake in London & Capital, a U.K.-based wealth and asset manager handling £4.1 billion in assets.
LMP seeks out sound companies that take a careful approach to business, and like many private equity firms often finds targets ripe to do add-on acquisitions for continued growth. Over the past 18 months, 10 of LMP’s portfolio companies have completed 40 add-on acquisitions, noted managing partner Robert Belke. “We have generally been pretty conservative investors,” he says. “When you look at our portfolio, they are more steady businesses but not the hot outperformers.” Once LMP acquires a target, the firm does not dictate strategy and is “highly collaborative” in its approach with its partner companies, he added.
Belke has identified numerous trends in the industries in which LMP operates: Increased competition for deals, a significant drop in multiples in the public markets, a slowdown in transaction activity, and disappointed sellers, many of whom expect to get paid more for their companies thanks to the deviant dealmaking boom over the last two years. This volatility has prompted LMP to be even more watchful this year.
“Right now we’re very focused on companies that will perform well through a cycle,” Belke said. “We’re being very cautious on the projections. Those that have done the best may not be the best opportunity right now.”