Seven Years to $2 Billion: What a Buyer Pays for a People Business

On September 4, EQT agreed to buy a majority stake in McGill and Partners, a London-based specialty insurance and reinsurance broker, from Warburg Pincus in a transaction the parties describe as a $2.0 billion deal. The firm did not exist before May 2019. It now has more than 600 employees, offices in seven countries and revenue the release puts at "in excess of $250 million." The price is worth studying because it shows how a buyer values a business with few hard assets, whose value rests on the people still there the morning after closing.

What was announced

McGill and Partners was founded in 2019 by Steve McGill, a former senior executive at Aon, with three colleagues and a cornerstone investment from Warburg Pincus. The idea was a broker built for large and complex risks, staffed by senior specialists, on a technology platform built from scratch. Seven years later, EQT's tenth flagship fund, EQT X, has agreed to acquire Warburg's entire stake. The founders, the management team and the wider employee base will reinvest alongside EQT and keep what the release calls a meaningful ownership stake. McGill stays as chief executive, John Lloyd stays as chairman, and closing is expected in the first half of 2027 after regulatory approvals.

Two details in the announcement matter more than the headline. First, every employee benefits financially from the sale, because the firm has operated an all-employee ownership structure since its founding. Second, EQT has committed to a new Equity Participation Plan for the next chapter, with a significant portion reserved for future hires. Both points tell you what the buyer believes it is actually paying for.

The arithmetic behind the price

Put $2.0 billion over revenue of a little more than $250 million and you get a multiple of roughly eight times revenue, perhaps somewhat less if revenue sits comfortably above that floor. Published benchmarks for insurance brokers make that figure stand out. Specialty and employee-benefits brokers have typically changed hands at 2.5 to 3.5 times revenue, or 9 to 12 times EBITDA (earnings before interest, taxes, depreciation and amortization, the cash-profit measure buyers use to compare businesses). Large platform deals, such as Gallagher's purchase of AssuredPartners and Aon's purchase of NFP, landed in the 11 to 14 times EBITDA range.

If EQT were paying a conventional 14 times EBITDA, the firm would need an EBITDA margin above 50 percent of revenue to justify $2.0 billion. Brokers that are still hiring senior producers and building technology rarely run at that level. The more plausible reading is that the buyer is not paying for today's earnings at all. It is paying for the revenue the current producer base will generate once it matures, for the margin that emerges when hiring slows relative to revenue, and for the growth rate that a seven-year-old firm with over 1,000 clients has already demonstrated. In valuation terms, the multiple on trailing earnings looks high because the denominator is temporarily small.

That framing is common in people businesses. A buyer underwrites three things: how much revenue each producer controls, how much of it will renew, and how quickly new producers reach full productivity. Retention moves price most. Books retaining more than 90 percent of clients command premium multiples, while retention below 80 percent pushes buyers toward heavy earnouts, in which part of the price is paid only if future results arrive.

Why the people stayed in the deal

A broker's revenue is a set of relationships held by individuals. If those individuals leave, the revenue leaves with them, and no purchase agreement can stop that. This is why the structure of the McGill deal is as important as the price.

Warburg Pincus is selling its stake in full. The founders and employees are not. They are rolling a portion of their proceeds into the new ownership structure under EQT, so the people who hold the client relationships will own a piece of the firm for several more years. EQT is also funding a fresh equity plan with a large share set aside for people who have not yet joined. That reserve is a recruiting tool: a specialist weighing a move from a large broker to McGill will be offered ownership, not just salary.

For a buyer, these commitments reduce the single largest risk in the purchase. For the sellers, they are also a cost. Every dollar reinvested is a dollar not taken off the table, and every share reserved for future hires dilutes the existing holders. The founders accepted both because the alternative, a clean sale with no continuing stake, would have produced a lower price. A buyer who cannot tie the people to the business will pay less for it.

The release also notes that management was advised separately from the company. The firm itself used Evercore, Perella Weinberg and Freshfields; the management team retained Liberty Corporate Finance and Mayer Brown. That separation exists because the interests diverge at the margin. The selling fund wants the highest price today. Management wants the highest price today and fair terms on the equity it will hold tomorrow: the percentage, the vesting, the treatment on departure and the protections against being diluted by later rounds. Those terms are negotiated, not granted.

What the seller's side shows

Warburg Pincus backed McGill at founding, which makes this closer to a venture-style investment than a typical buyout. The fund supplied the capital to hire a senior team before the firm had clients, then held for seven years. The sale is a full exit to another sponsor, a structure known as a secondary buyout, and it arrives at a time when sponsors across the market are struggling to return capital. US private equity exits totaled $102.6 billion in the second quarter, down roughly 46 percent from the first, and sales to corporate buyers fell 63 percent.

Against that backdrop, a clean $2.0 billion exit to a single buyer stands out. It was possible because the asset fits what sponsors are willing to pay for in 2026: recurring revenue, demonstrated organic growth, a founder still in the chair, and a team financially aligned with the next owner. Private equity buyers accounted for more than 80 percent of insurance broker acquisitions over the past two years, and the appetite has not faded.

What this means for owners of people businesses

The price follows retention, and retention follows ownership. McGill built an all-employee ownership structure at founding, so by the time a buyer arrived, the people who controlled the revenue already had a reason to stay through a sale. An owner who holds 100 percent of a firm where the revenue sits with ten people who own nothing will be asked to solve that problem at the negotiating table, usually through a lower price, a larger earnout, or both.

Growth can be priced on a revenue multiple, but only if the path to margin is visible. A buyer will pay a multiple of revenue rather than earnings when it can see that today's cost base is an investment rather than a permanent feature. That requires clean data by producer and by client: revenue per producer, tenure, retention, and the ramp of recent hires. Firms that cannot produce those figures get valued on trailing EBITDA, which is the lower number.

Reinvestment and the incentive pool are part of the price, not an afterthought. How much the founders roll, what percentage they end up holding after the new equity plan is funded, and how future hires are paid in equity are economic terms that determine what the sellers actually receive over time. Treat them as carefully as the headline figure.

Management needs its own advisors when it stays. Owners who will continue as executives and shareholders under a new sponsor should not rely on the company's bankers or the exiting investor's counsel to negotiate their rollover terms. The McGill team did not.

What to watch next

Closing is expected in the first half of 2027, subject to regulatory approvals in several jurisdictions. The terms of the Equity Participation Plan will determine how the founders' stake evolves. And if EQT's entry price proves workable, other sponsors will look for founder-led specialty firms with the same profile, which means owners who have built recurring revenue on a base of employee ownership may find the buyer pool deeper than they expected.