Striding on an acquisition spree, yesterday Marsh & McLennan Companies Inc.’s (MMC) Marsh & McLennan Agency LLC (MMA) announced the acquisition of Michigan-based McGraw Wentworth for an undisclosed terms and financial consideration. MMA is a subsidiary of Marsh & McLennan’s leading insurance brokerage wing – Marsh Inc.
With $15 million of annual revenue and 72 employees, McGraw Wentworth offers an array of strategic benefit consulting services to mid-size organizations. These include manufacturers, automotive suppliers, financial services, non-profit establishments, public schools and local municipalities.
Further, the acquisition will allow McGraw Wentworth to maintain its existing business model and work culture but add to its technical expertise and vast resources that was inaccessible to the firm until now. On the other hand, this deal will help Marsh & McLennan to expand its employee benefits coverage by consolidating individual outperforming agencies across the upper Mid-west of the US.
MMA has also bolstered its operations in the region with the acquisition of Minnesota-based Liscomb Hood Mason Co. last week. The company has also acquired Ohio-based Brower Insurance Agency and the employee division of Dallas-based Independent Insurance Group last month. The latest acquisition is yet another attempt by Marsh & McLennan to maximize its manpower resources in order to expand its clientele.
Following the acquisition of McGraw Wentworth, MMA acquired about 27 firms since November 2009. The broad band of acquisitions over the past few years has strengthened Marsh & McLennan’s position as a dominant player in its industry, quite closer to the leading Aon Corp. (AON).
Moreover, despite the acquisition-related costs, Marsh & McLennan has posted impressive results for the most of 2012. The company’s focus on boosting inorganic growth is well-correlated with delivering positive financial results as well. Alongside, a healthy balance-sheet and adequate liquidity eliminates any significant risk from the company’s financial leverage.
Overall, as a leading global broker, Marsh & McLennan has a history of outperforming its peers banking on its size, diverse product offering, global presence and technical expertise. We believe that the company has the ability to remain focused on this growth approach with a prudent management, thereby driving the earnings in the future as well.
Currently, Marsh & McLennan carries a long-term Neutral recommendation and a Zacks #3 Rank (Hold) in the short term.
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