Private Equity Firm Kelso to Acquire Majority Stake in Boston’s Risk Strategies

Risk Strategies Company, a Boston-Based insurance and benefits brokerage, and Kelso & Company, a New York City-based private equity firm, announced today that they have signed a definitive agreement whereby Kelso will acquire a majority stake in Risk Strategies from Kohlberg & Company.

Terms of the transaction, which is subject to customary closing conditions, were not disclosed.

Kohlberg & Company, a private equity firm based in Mount Kisco, New York, had first acquired a majority stake in Risk Strategies in June 2013.

The announcement said Kelso & Company will also invest “substantial additional equity capital” to support Risk Strategies’ growth initiatives. The transaction would help Risk Strategies enhance its client resources, add new teams of professionals in several segments and continue its strategic M&A activities to create additional growth opportunities, according to the announcement.

In addition, as part of the transaction, industry veteran Vic Krauze, who previously served as chair of Willis North America until earlier this year, will join Risk Strategies’ Board of Directors.

Risk Strategies’ leadership team — led by CEO and Founder Michael Christian — will remain intact. Risk Strategies management and employees have also retained significant ownership, the announcement said.

Risk Strategies focuses on middle and upper-middle market commercial and high-net-worth clients. The firm’s industry expertise includes healthcare, higher education, manufacturing, professional liability, construction, entertainment, fine arts, private equity, private client and real estate.

Risk Strategies has been active in the M&A space and has acquired a number of insurance brokerages in recent years including: DeWitt Stern in New York City; Crow Friedman Group in Memphis, Tennessee; Benefit Development Group in Worcester, Massachusetts; Northwest Comprehensive in Chicago; Dubraski & Associates Insurance Services in San Diego; and MacCorkle Insurance Service in Burlingame, California.

Kelso & Company, founded in 1971, has raised a total of nine private equity funds since 1980, representing $11 billion of capital, and has made over 110 investments. Kelso’s other insurance sector transactions include investments in Third Point Re and Wilton Re, according to Kelso’s website.

“This investment, which will buy out Kohlberg & Company’s 2013 stake, is an anticipated, welcome development and a sign that our efforts to build Risk Strategies Company into a significant, national industry presence are proceeding at a better-than-expected pace,” said Risk Strategies CEO Michael Christian.

“We are delighted to partner with Mike and his team. Risk Strategies has established itself as a premier insurance brokerage platform, and we look forward to supporting the company in its next phase of growth,” said Chris Collins, managing director of Kelso & Company.

“We are pleased that our partnership with Mike and the team at Risk Strategies has helped the company accelerate its growth trajectory and execution of its long-term strategic plan,” commented Chris Anderson, partner at Kohlberg & Company. “We are confident that the company will experience continued success through its partnership with Kelso, and we wish them much future success.”

Macquarie Capital served as Kelso’s financial advisor and is providing committed debt financing for the transaction. Debevoise & Plimpton LLP served as Kelso’s legal advisor.

Morgan Stanley & Co. LLC served as financial advisor to Risk Strategies, and Ropes & Gray LLP served as legal counsel to Risk Strategies.

Topics Mergers & Acquisitions New York