What has been remarkable is the speed and intensity of the ambition and execution.

‘We started with a plain sheet of paper,’ Cullum recalls. ‘We thought that we should shoot for a £100 million premium and a £10 million profit and that we could have an enterprise worth up to £140 million in five years. We were clear about what we wanted to achieve, as we had a lot of market knowledge. We took our acquired market knowledge and then identified not just niches, but crevices – they were so small.’

Cullum and his colleagues saw that a classic marketing approach, with its emphasis on focus and product specialisation, could be applied to the non-life insurance market.

‘The received wisdom in the industry was that it had to be commoditised and sold in packaged lots,’ he says. ‘Underwriting for the majority of classes could be done by computers; so long as the data was accurate and available, it was a straightforward process.’

Insurers often outsource their underwriting to specialists with necessary detailed knowledge of very particular sectors (such as caravan parks or golf clubs). For one thing, a caravan park owner isn’t a big enough enterprise to be an attractive customer for a large insurer; and, second, specialist knowledge is required to underwrite a caravan park successfully. These underwriting agencies tend to be small, privately owned businesses, working in isolation. Cullum perceived that the insurers had undervalued these agencies and that a rapid acquisition programme could achieve critical mass in a hitherto fragmented market.

So he sought out these agencies and bought them – by the barrel-load. He has acquired more than 50 in eight years.

It was one thing to buy them; it has been quite another to integrate them in order to gain the benefits of the scale that this rapid acquisition programme generated. In one respect, he was fortunate, as he was creating the corporate culture from scratch rather than having to marry two different cultures. His philosophy was to respect the individual knowledge of the underwriting staff and not impose an overweening management structure on top of them. All the advantages he gained by being fast in his acquisition strategy would be lost if the people working in the newly acquired businesses then felt constrained by committees or uncertainty about their ability to respond and act with authority. Towergate’s ‘head office’ has to be as small as possible.

In 2002 Cullum started to repeat the formula. He saw that the insurance broker market was fragmenting as a number of external factors combined. Insurers were moving to other forms of distribution channel, significantly by going direct or using the internet. Increased regulation of the sector, initially voluntary and then made mandatory by the Financial Services Authority, meanwhile, was introducing complexity and compliance burdens. And there was the fact that many broker principals were over 55.

For these reasons, many commentators had pronounced insurance broking a dying sector. In Cullum’s view, however, the brokers remained a very powerful presence. Roughly two-thirds of commercial insurance lines were maintained by brokers, as were virtually half of personal insurance lines. Brokers, he reasoned, had survived considerable attacks over the past 20 years and still retained loyal customers who valued their advice, interpretation and personal contact. Here, too, was another market ripe for acquisition.

Cullum’s new venture, Folgate, followed the same path as Towergate – it just consolidated even faster, buying more than 50 brokers in only three years.

In 2005 the two entities were merged as the Towergate Partnership. It became the tenth-largest broker in the UK. ‘If you had said eight years ago that the company would be writing £125 million, it would have been beyond my wildest dreams,’ Cullum admits.

‘We have ploughed everything back to fuel acquisitions,’ says Cullum. ‘We acquire good businesses rather than turnaround situations. Our balance sheet is the people – otherwise it’s dodgy furniture and some IT.’ The fuel that has driven this acquisition machine has changed in composition over time. In 1998 Royal Bank of Scotland gave the nascent company a £12 million loan that was a mixture of debt and equity. ‘Most banks were not disposed to blank-sheet-of-paper companies,’ recalls Cullum, ‘but we had a track record and we liked the people.

‘In 2002 Towergate had developed enough niches and crevices and that was when we moved to start Folgate and buy regional insurance brokers. So we put our plan together and RBS invested a further £20 million. In 2005, we agreed to buy back the RBS equity stake. They will have made a very good return.’

RBS is still very much involved in the growth of Towergate, however. Cullum’s next financing round saw a consortium of banks creating a debt vehicle – a £100 million war chest for further acquisitions. ‘There is no shortage of opportunities,’ he observes.

Very often, acquisition-led strategies can end up just being that: a collection of businesses that do not create greater value than the sum of those parts. Cullum’s market specialisation and speed has built up a considerable enterprise. But the real benefits are now being derived by his focus on how Towergate integrates and develops the people it is absorbing.

‘We have almost become a buyer of first choice,’ he says. ‘If you want to buy good businesses, you have to pay top dollar. The vendors become our new colleagues. They can’t feel that they have been short-changed because otherwise they can become terrorists within the organisation. I would hope that those who have sold to us feel that they have been treated well and fairly. We insist that they retain a small stake, which I think drives them to perform better. Our research sample of one – me – makes me think that.’

Peter Cullum is the Ernst & Young UK Entrepreneur Of The Year 2005. This article was originally published in Masterclass magazine.