Reliance Global Group Changes Funding Strategy for Spetner Acquisition
Reliance Global Group Inc., a New Jersey-based insurance broker, has requested to withdraw its public offering initially intended to fund the acquisition of benefits tech firm Spetner Associates Inc. in a $13.7 million transaction. Instead, the company plans to raise capital through the sale of its Fortman Insurance subsidiary for $5 million, having signed a non-binding letter of intent for the sale.
The decision comes after Reliance filed a Form S-1 with the US Securities and Exchange Commission (SEC) in January, outlining plans to fund the Spetner acquisition through the public offering. The original agreement with Spetner included terms to purchase 80% of the issued and outstanding shares of Spetner’s common stock, with a payment structure that included $5.5 million in cash, common stock equivalent to a 9.9% beneficial ownership in Reliance, and promissory notes for the remaining balance.
Reliance acquired Fortman Insurance in 2019 for approximately $4.14 million, with Fortman producing around $21 million in written premiums and $1.6 million in revenue at the time. Since then, Reliance has invested in modernizing Fortman’s operations and leadership structure, enabling it to negotiate a higher resale price in the pending $5 million transaction.
The Spetner acquisition remains part of Reliance’s growth strategy through acquisition, subject to financing. Spetner Associates operates the BenManage benefits enrollment platform, which supports voluntary employee benefits across a broad client base of over 85,000 employees across the United States. Reliance estimates that the Spetner acquisition could nearly double its annual revenue to approximately $28 million and generate more than $4 million in adjusted EBITDA in 2024.
Reliance previously regained compliance with Nasdaq’s minimum bid price requirement in 2023 after implementing a 1-for-17 reverse stock split. The company continues to view Spetner as a cash-generating asset at both the subsidiary and parent levels, maintaining its growth strategy through strategic acquisitions.
