The deep pockets of a Richmond insurer have lured a local homebuilder into its nest.
Markel Ventures, the investment arm of local insurance giant Markel Corp., last week acquired the Eagle Companies and its various construction and real estate affiliates.
The deal closed Aug. 13 and was announced Friday. Financial terms were not disclosed.
Providing what both sides call “permanent capital” from Markel’s coffers, the deal gives Eagle long-term stability and takes some of the financial pressure off Eagle’s owners.
“Being the kind of business we are and needing to utilize a lot of debt, the owners of a firm like ours are pretty much all in, all the time,” said Eagle President Bud Ohly. “You get to the point when you build something…wouldn’t it be nice to have the resources to not have to take the risk personally and keep it going.”
As is typical with Markel Ventures acquisitions, Eagle’s leadership will remain and run the day-to-day operations.
“Markel is the only company we would have done this transaction with,” Ohly said.
Ohly and Bryan Kornblau founded Eagle Construction in 1984. It had been primarily a homebuilder for many years, but branched out to create a company that can handle nearly every aspect of a residential or commercial real estate deal. There’s residential real estate brokerage Eagle Realty, Eagle Commercial Construction, commercial real estate brokerage NAI Eagle, and Innslake Title.
It’s the second major deal Eagle and Markel have worked together.
In 2010 Markel bought into a private equity fund that had been created by Eagle principals. Markel|Eagle Partners was born and has since raised a combined $84 million in two funds that invest largely in distressed real estate around Central Virginia.
“That venture has gone well. And we’ve gotten to know Bryan and Bud better and better,” said Tom Gayner, Markel’s chief investment officer who calls the shots Markel Ventures. “They’re good at what they do.”
Markel|Eagle Partners is not part of this latest transaction.
Eagle joins a diverse set of 13 other companies that have been acquired by Markel Ventures over the years. They include a pickle packing company, a wood flooring firm in Missouri, a tanker truck manufacturer in Pennsylvania, a baking-machine company in Georgia.
Its previous Richmond acquisitions include concierge medical service PartnerMD, Diamond Healthcare and AMF Bakery Systems.
Ohly said the Eagle and Markel began serious discussions in June and it moved quickly thereafter. He informed Eagle’s 110 employees of the deal on Friday.
This year has been a strong one for Eagle’s bread and butter homebuilding business, Ohly said.
“We are on pace to close around 300 homes this year.”
Having Markel as its capital backer gives the company a chance to go after more lots and build more homes.
“We’re going to continue to pursue our current strategy on Interstate 64 from the beach to the valley, and a lot of places in between.”
With he and Kornblau both in their 50s, the Markel deal could appear to some as an exit strategy for the two longtime partners who have previously discussed the importance of succession planning.
“It’s not the case [now], but it gives us one,” Ohly said.
“You don’t know what the last chapter will be in a business like ours. Now there’s not going to be a last chapter. The prospect of Eagle Construction being around well beyond anybody who’s there today was pretty attractive to me.”