Traverse City’s largest private employer, Hagerty, announced a blockbuster deal yesterday: The company will go public via a Special Purpose Acquisition Company (SPAC) merger with Aldel Financial and will soon be listed on the New York Stock Exchange. It’s a long road from the days of Frank and Louise Hagerty running a tiny insurance agency here. So how did it come together? What’s the company’s vision to “save driving?” And what does all of it mean for Traverse City? The Ticker spent time on a busy afternoon with CEO McKeel Hagerty. 

Ticker: First of all, congratulations. I know this is a culmination of months and months of work, but also in many ways decades of work.
Hagerty: That’s exactly right. It's kind of been my whole career, though it’s certainly not the end of anything. But yes, the last six months or so have been pretty crazy.

Ticker: So to summarize the deal: It values Hagerty at more than $3 billion. It merges you with an experienced financial player and someone familiar with going public and also the automotive market. It provides equity and cash for the family and shareholders. It takes Hagerty public, provides $275 million to your balance sheet to help accelerate growth, and the family maintains 52 percent of ownership at close.
Hagerty: That’s right. The numbers could flex up or down before the deal closes, but yes. And thank you for noting that it’s not a sale; it's still the same brand, the same management team, including me….and in some ways it’s kind of just an evolution for us. 

Ticker: So for those who aren’t aware, can you summarize what Hagerty has become in the past 4-6 years? The rapid growth and dramatic shift beyond just insurance?
Hagerty: Sure. Some of it was longer [than 4-6 years], but the most visible outward sign that we're not just selling insurance is that we are a membership organization. We are an automotive lifestyle brand. We don’t brand ourselves as an insurance company. We are partners to car people, and we serve them and help them to enjoy their hobby and pastime. Insurance is still the biggest part of revenue, but we interface with people through our media, like our magazines, our huge amount of digital properties. [For example], we are the media partner of the Pebble Beach Concours d’Elegance. That event was live streamed on our platforms, not on any broadcast channel…so it’s all part of the automotive lifestyle piece.

Ticker: So what’s the line that connects insuring a collectible car with you owning events and then your media? Is it just customer wallet share?
Hagerty: It is, some of that. But events have customers other than car people, like sponsors and the OEMs. And they are now our customers. We now have Porsche, Rolls Royce, McLaren, Ford. They’re now paying to be at our events, so we can activate them on our media and create some interesting partnerships. And certainly selling tickets helps, too…but [owning events] is not just some marketing effort. When the purpose is to save driving and car culture, it’s about people sharing their cars and enjoying them with other people. So for us, car culture and saving that for the next generations also means protecting those events we want to save for future generations, and some of these events run very thinly, and COVID really wiped them out. 

Ticker: You and I have talked in the past and I always insisted you’d eventually sell and the company would eventually leave Traverse City. This announcement seems like it might be among the best scenarios for Traverse City, at least in the short- and medium-term.
Hagerty: The best possible scenario. It puts us in control. We are headquartered here, and we are always going to have a lot of employees here. Now, there might be an upward bounded limit to how many employees we can have here because it’s not that big of a town, but we have a voracious need to grow, here but all over the country and indeed the world.

Ticker: Speaking of your people in Traverse City, most are still working remotely. What’s the plan there?
Hagerty: I think our teams are dying to get back. We are still meeting, and we were testing [for COVID] very early on, but yes, very few are back in the office on a daily basis. We’ve learned you can hire great talent that wants to work from home, but that culture is about getting people together. And when you're recruiting people, they want to come to an actual place. And then events become important, too. In Monterey, we had 85 people [from Hagerty]…so the plan was to by now or after Labor Day move to a hybrid 3 days a week in the office plan, but now without requiring declared a proof of vaccination — which we are considering — we’re just not there. And it’s kind of sad, because I love our office spaces. But we will be back soon.

Ticker: You sure look smart for selling your real estate a few years back.
Hagerty: Sometimes I get one right.

Ticker: How specifically does the influx of cash get used? Where will you accelerate growth? You must have your eyes on deals, events, and new initiatives.
Hagerty: I do want to be careful here [until the deal is done]. But one of the biggest shifts is when you’re a private company, you can only spend the money you have or can borrow. So we will have more capital to do bigger stuff. One area I know it will accelerate is technology spending. The benefit of our business model is it’s really hard to replicate, but the tough part is you need a lot of "A level" talent in a lot of different areas…We’ll also be able to offer equity plans to attract and retain top level talent, which was tough for us before. And certainly we will be acquisitive or create new things. But this is not some rollup of other companies to give us scale; we like organic growth, and we want to keep that going.

Ticker: You’ll soon have the mantle as Traverse City’s only public company.
Hagerty: It’s funny you mention that. You might be right. You know, some friends have said, “are you sure you want do to this?” But you know, we’ve been building these muscles for a while now…I’m just not going to start thinking quarterly [because we’re public]. We will have to report [financial results] quarterly, but I’m thinking generationally.

Ticker: So what will be going through your mind when you are standing on the New York Stock Exchange floor, ringing that bell as the CEO of a public company? It’s going to happen.
Hagerty: I know that my dad would be just blown away, and my mom — I’m having dinner with her tonight -- she’s very proud. And you know my sisters are super proud of this too. It’s amazing we were able to do this here. I’ve got to say, I’ve shed quite a few tears of joy already.