Cooling Off the Cash Burn

How William Goldstein, CFO of Integro, an insurance brokerage, helped the firm modify its great expectations.

In 2005, just three years after the collapse of Arthur Andersen, the opportunities represented by the sudden exit of a giant professional-services firm loomed large in the minds of the founders of Integro, a privately held insurance-brokerage start-up. They looked around at the major insurance brokers — Marsh & McLennan, Aon, and Willis — and wondered if one of them might be a potential Andersen, the once–Big Five accounting firm that bit the dust in the wake of its dealings with Enron.

It was a time when the demise of at least one of the top brokers could well be envisioned. Early that year, Marsh & McLennan agreed to pay $850 million to settle charges of fraud and anticompetitive practices stemming from an investigation by then–New York State Attorney General Eliot Spitzer into bid-rigging in the insurance industry. Later Spitzer reached similar settlements with Aon and Willis for $190 million and $50 million, respectively.

Into the breach came former Marsh president and insurance-industry luminary Robert Clements and others looking to take advantage of the potential they saw in Spitzer’s goring of the big brokers. In 2005 they managed to raise $320 million in capital in a private offering to form Integro, a firm they hoped would grow large enough, regionally and personnel-wise, to compete with the big boys. They proceeded to hire 400 employees — 75 of them at the home office — and open offices at major cities in the United States, the United Kingdom, and elsewhere.

Unfortunately, the Big Three brokers have proved more durable than Integro’s founders were counting on. The fledgling broker found itself burning through cash at a faster rate than it was able to pick up revenues — largely on the basis of those big hiring costs. The result has been that the $320 million in initial capital now stands at $70 million, according to William Goldstein, the firm’s CFO.

Integro's GoldsteinGoldstein: “I was essentially charged with building the financial systems from what were basically QuickBooks. You could walk into Staples to buy our initial accounting package; within 12 months, we put in Oracle Financial.”

It was time to change direction. In the fall of 2008, the firm’s board decided to make some leadership changes. The company’s CEO and CFO left, and Goldstein, a former PricewaterhouseCoopers auditor who had Integro as a client, joined the brokerage as its first controller in February 2006. He was promoted to CFO in 2008.

Since then, Integro has sought to shrink the big footprint it established (by closing offices and cutting its workforce by 20%, to 265) and to refocus itself as a nimble specialty firm. In the process, he says, the $60 million firm has enjoyed yearly revenue growth of about 20%, although its cash flow is still flat. In an October 1 interview with, he recounted what it was like to build a finance function from scratch and to move from public accounting to corporate finance, and how to extinguish cash burn at a small firm. An edited version of the interview follows.


Your email address will not be published. Required fields are marked *