Greetings, and welcome to the BRP Group Partnership Announcement conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Anyone to require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Director of Strategy and Partnership, Austin Rock. Thank you, Austin. You may begin.
Thank you, operator. Good morning. By now, everyone should have access to our partnership announcement and slide presentation, which were released prior to this call, which may also be found on the investor relations portion of our website at baldwinriskpartners.com. Before we begin our formal remarks, I need to remind everyone that part of our discussion today may include forward-looking statements, which are based on the expectations, estimates, and projections of management as of today. The forward-looking statements in our discussion are subject to various assumptions, risks, uncertainties, and other factors that are difficult to predict and which could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These statements are not guarantees of future performance, therefore undue reliance should not be placed upon them.
We refer all of you to our recent filings with the SEC, including our quarterly reports filed on November 12th, 2020, August 13th, 2020, and May 13th, 2020, our annual report on Form 10-K for the year ended December 31st, 2019, for a more detailed discussion of the assumptions, risks, uncertainties, and other factors that could impact the future operating results and financial condition of BRP Group, the partnership discussed on this call, or both, including those relevant to our integration of this partnership and matters assessed in our due diligence of the partnership, as well as those related to potential effects of COVID-19 pandemic on our business, financial condition, and results of operations.
On this call, we refer to the effects of COVID-19 related government shutdowns, stay-at-home orders, business closures, travel restrictions, social distancing, and other preventative measures, business disruptions, economic contraction, COVID-19 related developments by generally referencing COVID-19 or the pandemic. We disclaim any intentions or obligations to update or revise any forward-looking statements except to the extent required by applicable law. In addition, this call is being webcast and an archive version will be available after the call on the investor relations portion of our website. I will now turn the call over to Trevor Baldwin, Chief Executive Officer of BRP Group.
Thanks, Austin, and good morning, everyone. We appreciate everyone taking the time to join us this morning on the back of the new partnership we announced yesterday evening with Armfield, Harrison, and Thomas, a middle market firm based in Virginia, ranked number 65 in Business Insurance's most recent list of top 100 brokers. I first want to warmly welcome our new colleagues, clients, and community stakeholders that come with the AHT partnership. We are thrilled and honored to be entrusted as the ideal partner and home for such a talented group of insurance professionals and very much look forward to growing together as we leverage the respective geographies, expertise, and capabilities of our newly combined platform.
During this call, I will make a few brief remarks on the AHT partnership and our current pipeline, turn it over to John Valentine, our Chief Partnership Officer, to provide a more wholesome overview of AHT's business. To wrap up, Kris Wiebeck, our CFO, will provide a quick update on our pro forma financial position, and at the end, we'll open the line up for Q&A. To start, we could not be more excited about the AHT team choosing to partner with us. We have come to know their President and CEO, David Schaefer, Chief Operating Officer, Kate Armfield, and the rest of their extremely talented management team and shareholder group very well over the last few years, and we believe both their geographic footprint and suite of deep industry and product expertise will meaningfully bolster our capabilities and our broader middle market franchise.
AHT brings immediate scale on several major geographies in which BRP lacks a meaningful presence today, most notably with large offices in the Seattle and Washington, D.C. metropolitan areas. They also feature eight specialty practice groups and specific niche product expertise that bring immediate value to our broader middle market platform, most notably in the technology, not-for-profit, life sciences, manufacturing, and NGO industries, as well as an experienced team dedicated to management liability and public company D&O, among others. Finally, AHT maintains an excellent reputation in the marketplace and carries a relentless colleague and client-centric culture that is similar to the atmosphere we have and continue to cultivate. In summary, our partnership with AHT represents a momentous milestone in the history of our firm and undoubtedly leaves us better equipped to execute for our clients across a growing range of end client industry sectors and product lines.
In aggregate, the partnership adds $52.3 million of annualized revenue, excluding five and a half million of pro forma annualized revenue acquired by AHT in the last 12 months, and $14.6 million of annualized acquired EBITDA, making it the largest new partnership in the history of our firm and the second top 100 firm we have partnered with in the fourth quarter of 2020. The upfront EBITDA purchase multiple on the transaction is roughly 14.5x, which is a reflection of the quality of the business, its scarcity value, its incredibly talented people, its national scale in key geographies, and strong suite of industry and product expertise. As we've talked about in the past, this partnership features an earn-out structure that should the business meet certain meaningful growth targets, will deliver incremental consideration to the sellers and also lower our effective purchase multiple.
Including this partnership, our 2020 year-to-date acquired annualized revenue, calculated as revenue attributable to acquired businesses for the most recent 12-month period evaluated in the Quality of Earnings review prior to acquisition, now sits at $172 million. Importantly, we continue to have active dialogue with a host of potential partners and maintain a robust partnership pipeline. With that, I'll turn it over to John to provide a bit more detail on AHT's business.
Thanks, Trevor. Good morning, everyone. To reiterate some of your remarks at the outset, we consider ourselves incredibly fortunate that AHT has chosen to join us, and we're extremely excited to welcome the colleagues into our organization with open arms. AHT is a leading middle-market agency based in the D.C. metro area, with offices in Seattle, New York, Boston, San Francisco, and Chicago, providing BRP with an established presence in six major U.S. markets, five of which we had lacked a meaningful presence prior to this partnership. AHT generated $52.3 million of annualized revenue in the most recent period evaluated through diligence, which excludes approximately $5.5 million of annualized revenue associated with acquisitions completed by AHT over the last 12 months. AHT has grown its revenue consistently over an extended period of time.
The company also has a well-diversified business mix, with 54% of the company's revenue derived from commercial property and casualty commissions and fees, 34% from employee benefits, and the balance coming from retirement and personal and international risk solutions. As Trevor alluded to, AHT brings to BRP specific industry expertise via eight dedicated specialty practice groups, including technology, not-for-profit, life sciences, manufacturing, construction, international aid and development organizations or NGOs, financial institutions, and real estate. Away from its specialty practice groups, AHT also features deep niche expertise in areas such as management liability, including public company D&O, aviation, and equine, just to name a few. The company is led by a world-class team who collectively have garnered over 70 industry awards to include receiving the Independent Insurance Agents & Brokers of America's Best Practices designation continuously dating back to 2007.
The AHT team has cultivated a strong culture and has prided itself on being a destination for the industry's top talent. They have been a mainstay on Business Insurance's Best Places to Work list over the last decade to include recently receiving the honor again in 2020. As Trevor mentioned, the team has built an incredibly strong reputation and are widely regarded as thought leaders amongst their peers. Kate Armfield, the company's Chief Operating Officer, currently sits on the board of directors for the Council of Insurance Agents and Brokers, a prominent industry trade association for 200 of the world's top commercial insurance and employee benefit brokerages. Again, in summary, we're incredibly excited about our new partnership with AHT, to welcome the colleagues into our organization, and about the many ways we complement the future growth of our relative businesses in the broader BRP platform going forward.
With that, I'll turn it over to Kris.
Thanks, John. Good morning, everyone. If folks are looking at page five of the presentation we posted to our investor relations website this morning, a quick reminder on how the combination of the earn-out structure we employ in our deals, plus the fast-growing nature of our partners, works to lower our effective purchase multiples as new partners continue to grow on the BRP platform. A quick refresher on what this table shows. In the first row, you'll see the aggregate total upfront consideration, revenue, EBITDA, and implied EBITDA multiple of all 13 partnerships we've completed year to date, which reflects an implied EBITDA purchase multiple of 13.1. In the bottom row, you'll see the same, taking into account earn-outs, assuming all of the 13 partners grow at a compound annual growth rate of 25%. Note this is blended. Not all earn-out structures for individual partnerships are the same.
As you move towards the bottom of the table, the total consideration increases for the earn-out consideration earned. The revenue and EBITDA also increase to reflect the growth of those businesses on our platform. To wrap up, pro forma for the closing of the AHT and Insgroup, Inc. partnerships, our net leverage ratio is approximately 4.3, and we will continue to be thoughtful about managing our leverage in and around the thresholds we previously communicated. With that, let's open up the line to questions.
Thank you. We will now be conducting the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first question comes from the line of Meyer Shields with KBW. Please proceed with your questions.
Great. Thanks. Just two basic ones. First, can you give us a sense of how exposed AHT's revenues are to an economic recovery? In other words, how sensitive are their exposure units to the pressure that we saw in 2020? What would be the associated upside in 2021?
Yeah. Hey, Meyer, this Trevor. If you look at page four of the partnership announcement deck, you can see a breakout of some of the specialty practice revenues, and you'll see the largest specialty practice being the technology industry. In general, while I don't think any business is not exposed to the economic pressures right now, we think AHT has been fairly insulated, and certainly, represents an organization with a collection of clients across and find industry sectors that will continue to perform as the economy recovers, hopefully in the ensuing year.
Okay. No, that's helpful. Second question, I think on the third quarter call, your slide deck has this very helpful presentation in terms of pro forma margins for modeling. Does the seasonality of AHT impact that in any meaningful way?
Hey, Meyer, it's Kris. I would definitely say, we're still reviewing the 606, but roughly, what we've seen is, and I'm going to give you rough numbers we'll clear up, but roughly Q1 is their largest, at around 35%, 36% of revenue. Q4 being their smallest, 19% of revenue. Obviously, with us getting it in for only one month, I don't think much changes for 2020 compared to what we talked to on the last call. Obviously, we'd anticipated this. I think as you get to 2021, you could use those as placeholders when you're building things out.
Meyer, to be clear, that's not margin. That is-
I'm sorry, that's their revenue. That's how their revenue hits over 606. Obviously, in quarters with higher revenue hitting, you tend to have higher margin.
Yeah. No, understood. That's perfect. Thank you so much. You sound great.
Thank you. Our next question comes from the line of Elyse Greenspan with Wells Fargo. Please proceed with your questions.
Hi. Thanks. Good morning. My first question, I guess maybe following up on some of the prior questions. Can you just give us a sense of the organic revenue growth that AHT has seen throughout 2020 and anything, I guess you can kind of disproportionate a % on the outlook there going forward?
Yeah, Elyse, it's Kris. I would say, through 2020, what we've seen, and again, the way we measure organic is based on audited numbers, but we would see through the Quality of Earnings, which are unaudited organic growth, that would be better than the middle market kind of publicly traded peers and a little lower than what we saw in our middle market business. Think mid to high single digits. However, if you go back further and if you look at our expectations on the BRP platform, is this will be in line with our middle market business in that kind of 10-15% organic growth range that we've long given. We think their industry niches and our combined footprint, plus some of what we can do in their footprint, will be beneficial going forward.
Yeah. AHT's got a 20-year track record of out-indexing the industry from an overall growth perspective, Elyse. We believe they possess all of the attributes necessary to continue contributing towards our goal of delivering that durable organic growth well into the future.
Okay, perfect. The margin here, based off of the disclosures, right, their EBITDA margin's running at around 28%, which is a bit better than where kind of legacy BRP has been running. Could you just give us a sense of should this deal come on and about that margin? Could this be accretive to margins? I guess following up the seasonality question, is there any seasonality associated with their margins that could be distorted to your overall results as it comes on?
Yeah, sure, Elyse. I think a couple of things to point out. I think when you get that higher margin percentage, you're taking the 52.3. As John and Trevor mentioned in their comments, there's about $5 million of revenue that is not captured in the deck because of the way GAAP reporting works for what we can capture as revenue, but it relates to deals that they had done this year that aren't in. So when you add that in, you get closer to a 57 number, that you would divide the EBITDA by, and you get a margin that's closer to a 24% margin. Obviously that's still accretive, but not quite as high as the one you referenced. I think as far as margin seasonality, we would expect it to be in line with the revenue seasonality that we laid out for Meyer's question.
Okay, that's helpful. Then, in terms of the pipeline, I think Trevor, you started off your comparative remarks by saying that this is a robust pipeline. I recognize it's a call on this transaction, but you guys have been pretty vocal about this being the end of the year ending strong from a partnership standpoint. You obviously have announced your largest deal followed by your largest deal right pretty close together. Can you just give us a sense of the pipeline and how we could think about additional transactions materializing between now, the end of the year and even a little bit of a look into the start of 2021?
Yeah, Elyse. I'll just point you back to my earlier comments and reiterate we're in dialogue with a number of firms and continue to maintain a robust pipeline. Outside of that, want to keep the focus on this particular partnership this morning.
Okay. Thank you. Thanks for the color.
Thanks, Elyse.
As a reminder, if you would like to ask a question, please press star one on your telephone keypad. There are no further questions at this time. I would like to hand the call back over to management for any closing comments.
Thank you. Appreciate everybody dialing in this morning. Just want to really reiterate a warm welcome to all of our new colleagues from AHT. We couldn't be more thrilled and honored to be the forever home and really look forward to growing together. Thank you all. Talk soon.
This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.