AWARD SPOTLIGHT: Highland West Capital Ltd. Winner of the 2022 Private Equity Deal of the Year award for Allwest Insurance Services Limited
When Paul Zalesky and his wife Devina went looking for a partner to help them run their rapidly growing business, Vancouver-based Allwest Insurance Services Ltd., they wanted it to be about more than money.
The couple, who bought the auto insurance company in 1992 and took it private, wanted experienced investors who could recruit top executives to help run and expand the business – giving them more time to do what they loved most, working directly with clients. And last but not least, they wanted equity partners who shared their vision and values.
With the help of PwC, in 2016, the Zalesky’s partnered with private equity firm Highland West Capital Ltd.
“The main reason we went with Highland West, as opposed to other suitors – one of which was even offering more money – was because of the strong alignment and a shared vision for the business,” Paul Zalesky says.
Highland West helped to bring on several key executives, including chief operating officer James Beaulieu, who Zalesky describes as “the Wayne Gretzky of insurance.”
He also appreciated Highland West’s hands-off approach. “They let us run the company. There was never, ever any disagreement on a deeper level,” Zalesky says. “It was phenomenal.”
Trevor Brady, a director at Highland West, says his firm was attracted by Allwest’s business model directly serving customers in the auto dealerships once they bought a new vehicle, and its strong focus on customer service. He says Highland West’s strategy, in part, was to help Allwest expand by retaining more of its captive customer base.
For instance, Brady says Highland West’s investment and expertise helped the company build out a call centre focused on following up with customers to renew their insurance policies with Allwest. The strategy included investing in technology to track when policies were set to expire and proactively reach out to customers.
“That had a huge impact on the success of the renewal business and was a powerful model for growing revenue,” he says. By 2021, five years after Highland West made its initial investment, Allwest’s revenue nearly doubled, while EBITDA more than doubled.
In early 2021, the partners believed it was an opportune time to sell the business amid several changes to the insurance market in B.C. and to take advantage of ongoing consolidation in the industry.
“It was very much a seller’s market, and we came to the conclusion that it was time for us to look for a suitor,” Zalesky says. Highland West concurred with its partners, it made sense financially and was a logical point for the company to partner with a national broker.
Allwest went through another strategic process with PwC, which brought Toronto-based Navacord Corp. to the table. In May 2021, Allwest was acquired by Navacord, one of Canada’s top four commercial insurance brokerages and a leader in risk management services.
Highland West realized an 11.25x MOIC (gross multiple of invested capital) and an IRR (internal rate of return) of approximately 70% on the transaction.
The transaction was awarded the CVCA’s PE Deal of the Year Award.
“It has been a great experience partnering with the Allwest team and its founders, Devina and Paul Zalesky, to significantly grow the business over the last five years.” Highland West founder David Rowntree said in a statement when the deal was announced.
Zalesky describes Highland West as “the perfect partner – and I don’t use the word perfect very often”.