In 2024, UK insurance distribution saw 152 announced M&A transactions, with a total deal value of £4.1 billion. Yet against this tide of consolidation, Gareth Cotty (pictured) and his partners at UK-based brokerage Thomas Carroll Group chose a different route: transitioning to employee ownership through an Employee Ownership Trust (EOT).
"Every broker gets to a point where succession planning becomes a live issue," said Cotty, a senior executive at the firm. "For us, a trade sale was never even on the table. We made that decision very quickly."
Cotty acknowledged that many industry peers were watching Thomas Carroll closely, expecting it to follow the well-worn path of selling to a larger consolidator or private equity. But the leadership team had other priorities.
"We wanted to do right by our people," he said. "A trade sale might be great for shareholders in the short term, but often not for the business that gets left behind."
Respecting the values of the founders and protecting the firm from future acquisition were also major factors. "We used to say the industry was sleepwalking into American ownership. Now it feels like it's sprinting," he said. "We think there's still a strong place for independent brokers."
Thomas Carroll did not set out to be the first broker in the UK to transition to an EOT model, but Cotty is glad others have since followed suit. In this structure, 94% of the company’s equity was placed in a trust to benefit employees equally.
"Everyone is treated the same from a bonus perspective. The better the business performs, the better everyone does," he said. "That shift from employee to co-owner takes time to embed, but it’s already influencing retention and recruitment."
The model hasn’t slowed down governance or operations. The board of directors retains broad decision-making powers, while a trust board ensures the company is run in the best interests of its employee-owners.
"We're more transparent now," Cotty said. "We do full owner packs for our AGMs and share more of what's going on behind the scenes."
The EOT model has not changed the firm’s risk appetite or investment strategy. "We're not driven by short-term shareholder value or external debt repayments," Cotty said. "We take a three-to-five-year view on investments and growth."
Recent expansions, including a new office in Bristol, have been bolstered by strong recruitment. "We've brought in talent from Marsh, James Hallam, Gallagher, Towergate and others,” he said. “People who had been through multiple acquisitions wanted stability and saw us as a long-term home."
Still, the transition wasn’t without hurdles. Gaining FCA approval took longer than expected, and managing internal communications proved delicate.
"We called a company-wide meeting to announce the transition," Cotty said. "People saw the suits from legal and thought we were selling. When we shared the truth, it took a moment to land."
Maintaining momentum post-transition required renewed focus. "The first six months were great, but we probably should have upped our internal comms messaging after that," he said. "The key challenge is helping people recognise that they’re now co-owners."
Cotty believes more firms in insurance broking could succeed under employee ownership, if they’re willing to plan early and lead with intention.
"We have self-funded the transition and have spent a decade building cash reserves to support the move,” he said. "If you want to avoid a trade sale, give yourself time. The less rushed you are, the more options you have."
While acknowledging that a trade sale may still be the right choice for some, Cotty is clear on the trade-offs. "EOT isn't as financially rewarding for sellers, but it was never about that for us. It was about protecting our people, our clients, and the legacy of our business."
Clients, too, have responded positively. Some, Cotty noted, were surprised by the decision but quickly came to understand and support it. "We’ve even had clients asking how they could implement something similar,” he said.
As for Thomas Carroll’s place in the market, Cotty reaffirms the company’s traditional values: "We're an open-market broker with hundreds of agency relationships. No MGAs, no proprietary products. We’re driven by what’s right for the client, not the shareholders."
The EOT model may not yet be widespread in UK broking, but Cotty sees a future where it becomes more common. "If you’re trying to extract every penny, it’s probably not for you. But if you care about continuity, culture and community impact, it’s well worth considering."
