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Mystic Capital Advisors Group

A leading, nationally focused mergers and acquisitions, and due diligence consulting firm. Sound advice, sound results.

Founded in October 2001, by former employees of The Hartford, Mystic Capital Advisors Group focuses on insurance and insurance only. “We are a mergers and acquisition advisory firm working in three areas,” says Kevin Donoghue, CFA, CPA, CIC, managing director of the New York-based firm. “We advise insurance companies, we advise retail insurance brokers and we advise MGAs [managing general agents], wholesalers and program administrators. We’re 100 percent focused on serving buyers and sellers in the insurance space.”

His team is made up of experienced financial professionals with extensive training. “They all have a heavy insurance background,” explains Donoghue, whose company also has offices in Charlotte and Dallas. “Finance is their core competency. They’re CPAs, CFAs, MBAs.”

Given the economy, one could picture Donoghue or any of the firm’s advisors sitting in a cushy recliner, reading a good novel. That’s not the case. “Sure, business is a little weak compared to last year, in terms of the number of transactions,” Donoghue admits. “The soft market hasn’t helped and economic conditions have put mergers and acquisitions in a state of flux. That just means we’re working harder for our clients, trying to find more opportunities.”

Despite the temporary lull, Donoghue sees things changing—and soon. “Activity should pick up over the next year or so,” he explains. “There’s a lot of discussion that, in 2011, capital gains tax rates will go up.”

Such a change would trigger an influx of business from privately held companies where the owners are up in age—and there are plenty of those in the insurance arena. “If they’re thinking about selling in the next three to five years, they’ll probably want to move the sale date up to take advantage of the lower capital gains rate,” he says.

While mergers and acquisitions advisory work represents the cornerstone of Mystic Capital’s business, the firm offers a number of related consulting services, including business valuations, perpetuation and succession planning, lender advisory services, due diligence, and owner and producer compensation plan development.

A key part of Donoghue and his team’s current work involves strategic consulting. “We help people understand the pros and cons of going into the market now,” he explains. “We’re not pushing them to sell by talking doom and gloom. We’re focusing more on their long-term strategy.”

If there’s even a remote interest in selling in the next three- to five-year window, the advisors are encouraging owners to test the market sooner rather than later. “We don’t know if or when capital gains rates might come back down after they go up.”

For those with a longer horizon, Donoghue advises, “Focus on your business, spend time growing it, doing the fundamental things that make you successful, and worry about cementing an exit strategy when you’re closer to a sell situation.”

Over time the firm has taken a very realistic tone with strategic consulting, he says. “We don’t drive them to the end result of buying or selling. We review with them their objectives and then map a plan to get them there. Other groups try to arm twist, saying, ‘Sell now or face the wrath.’ We don’t play that game.”

Clients appreciate the approach. One says, “Mystic is ‘hands on,’ helping us identify acquisition opportunities and then working them all the way through. No boilerplate or wasted energy—they customize their work to complement our own. And they are brutally honest, freely criticizing deals that would make them money in the short term but would fail to meet our company’s long-term expectations.”

Another describes Mystic Capital as, “Knowledgeable, thorough and very responsive…[providing] an extremely valuable ‘second set of eyes.’”

A leading MGA says, “When it comes to acquisitions and strategic opportunities, Mystic Capital has become our valued advisor. We focus our energies on running our business and we rely on their expertise and experience to guide us through.”

Donoghue values the relationships he’s built through involvement with the Target Markets Program Administrators Association, and is eager to forge new ones. In a burst of emotion not often exhibited by numbers guys, Donoghue says, “We love the program administration space.”