Build-ups: TEXA buys new business lines

IMG_2756.jpgBy acquiring Eurisk on 1 October, TEXA moved up a gear in the French market for insurance expertise and services. This transaction is confirmation of the diversification strategy begun by the Group in 2009. Pierre-Antoine Lagé, Chairman of the Board, talks to us about TEXA’s external growth strategy.

“We want to become the leading provider of insurance services”

TEXA was founded in 1987 from the merger of six loss adjusters. Gradually, the Group structured its service offering around four areas: personal claims management, technical expertise, agricultural expertise and disaster recovery compensation. “Prior to 2009, we had a policy of small company acquisitions coupled with internal growth. We then decided to accelerate the expansion of our service offering to become the leading provider of insurance services.”

To diversify its service offering in a consolidating insurance market, in 2009 TEXA bought Allodiagnostic. This was its first acquisition of a company in a business line with which it was not already familiar: property insurance. Four years later, in 2013, the Group continued along this path by acquiring the CLE network of construction appraisers. This opened the door to a fifth business line: construction appraisal. A business that it strengthened with the acquisition of Eurisk a few days ago.

“For these transactions to succeed, there must be synergies”

For Pierre-Antoine, the main challenge of these build-ups is to create value. “For example, in the CLE acquisition, even though we had little experience in this field, we brought real commercial know-how and high-level contacts within our client base.” In a service business, external growth is about buying business goodwill, but also integrating skills, or experts, that you want to keep and use. The Chairman remembers that reconciling the different corporate cultures is not always straightforward. “CLE’s corporate culture, for example, was very strong, with a team focused around its founder-owner. We looked for growth synergies rather than a sudden introduction of group procedures.”

Pierre-Antoine also emphasises the role of communication. “Communication is essential to external growth. We communicate very early on to prepare the ground and avoid the anxiety from such a transaction. Afterwards, we try to reassure staff about our strategy through seminars or the intranet.”

To gain the support of the teams, TEXA also works on management’s integration in the group. For Pierre-Antoine, these post-integration measures must be managed during the planning process: “You have to create conditions that are as favourable as possible to the integration, with a well-structured plan”.

“The role of Apax in the Eurisk acquisition has been crucial” 

A shareholder in TEXA since 2012, Apax Partners advises TEXA on its external growth transactions. “Although we managed our first two transactions pretty much on our own, the role of Apax in the Eurisk acquisition has been crucial.” More than a financial investor, Apax Partners brought its experience in deal structuring and negotiation to TEXA. “Apax gives us the investment resources required to reach our goals.”

“The results encourage us to continue our external growth”

“The results encourage us to continue our external growth.” Pierre-Antoine takes the construction insurance sector as an example: “In this completely new business line, we became a leader within two years, with 30% of the French market”. Following the Eurisk acquisition, the group’s turnover went from 125 to 180 million euros. “Our goal is to become the leading provider by size, service quality and innovation. We will continue our external growth strategy to achieve this”, Pierre-Antoine concludes, implying that another build-up is being planned in the compensation-in-kind sector.

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