Strong personalities ensure consolidation competition continues

For our industry's consolidators the targets are set and the race is on. The broking landscape is being dominated by merger and acquisition talk and PB has been reporting on deal after deal after deal. Acquisition frenzy reflects the fragmented market, the ambitions of the buyers and also the difficulty in persuading some of broking's successful, strong-minded business leaders to sell up. Rather than spending huge amounts of time negotiating and travelling around the country, businesses could be transformed by just one or two deals, hence the attraction for Axa of purchasing Smart and Cook.

Some of the leading lights of the industry have managed to secure large prices for their businesses, thereby pocketing a guaranteed bonus and retaining the power to do what they do best. Stuart Reid is working harder than ever before despite having made a huge personal windfall. Why? Partly because Axa has paid for his talent and he is contracted in for several years, but also because Reid is an entrepreneur and entrepreneurs businessmen driven to succeed and excel. However, Axa's aim of reaching £1bn premium could be blocked by the very consolidation that its broker trio has been thriving upon. The competition, including firms such as Jelf, Giles and Oval, has been just as successful as Smart and Cook at buying brokers, and their unwillingness to sell makes some of the larger targets harder and harder to achieve, hence Towergate's drive into the IFA market.

A few months ago speculation was rife in the national press that Peter Cullum, who has also benefited from selling £65m of preference shares, was about to find an exit at Towergate. Cullum has executed tens of purchases over the last decade but, perhaps ironically, it will be his own exit that could prove to be his greatest business accomplishment. When he decides the time is right, one of his main challenges will be persuading buyers that the business can function just as well without him and that there will not be an exodus of senior staff on his departure. Building businesses is one skill, selling them is a whole different ball game.