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DAVID LOCKTON'S family-run insurance brokerage, founded by his older brother four decades ago, is in a situation that might panic many owners of midsize businesses.

Within the space of several months this year, Wall Street giants including Blackstone LLP and Goldman Sachs Group Inc. bought up three other smaller brokerages. Now, those three rivals are backed by firms that control tens of billions of dollars. In its most recent fiscal year, Lockton Inc. had revenue of $667 million.

Time to worry?

Not according to the 54-year-old Mr. Lockton. The family has no intention of selling its business. In fact, he believes the company stands to benefit by not changing at all.
Lockton aims to stand out from its bigger rivals by continuing to stress its personalized service, paying brokers well to keep them from jumping ship — and taking clients with them — and promoting the fact that, as a family business, they don't have to answer to anyone but themselves.

It's a strategy that holds lessons for other relatively David-size companies that find themselves wrestling with Goliaths that buy out smaller rivals.

Mr. Lockton isn't the only one who thinks the recent acquisitions may not be ominous for the firm. "I don't think that there's going to be much of a big impact on their business," says Nik Fisken, an analyst at Stephens Inc.

Adds Edward Bowler, a senior vice president at brokerage firm USI Holdings Corp: "Nothing changes."

Mr. Lockton and his three nephews — who are all executives and board members — hold equal stakes in the closely held firm that add up to about 90% ownership, and the entire company is in family hands. Mr. Lockton became CEO when Jack Lockton, his brother, was diagnosed with cancer in 1998. Jack Lockton died in 2004.

Key to Lockton's growth, Mr. Lockton says, is the fact that the family is willing to plow money back into the business. The company's pretax profit margin, he says, is 10%.
Another reason is how the company spends that money. "Lockton pays its [brokers] a ton of money," says Mr. Fisken, who has tracked a number of brokerage firms.

That's important because individual brokers often have strong relationships with their clients, and those clients sometimes follow brokers if they change jobs. So keeping and recruiting strong brokers is one way for a brokerage to expand.

But Mr. Fisken adds that Lockton could, in fact, face more competition if it seeks to recruit other brokers because of the recent acquisitions.

Lockton also spends money providing services that don't directly generate profits for the company.

For instance, 63 of the company's roughly 3,825 employees are dedicated to advising clients on how to make workplaces safer so as to avoid triggering insurance claims in the first place. An additional 120 assist in filing claims in the U.S. alone.

The industry has seen a dizzying number of acquisitions over the years that have helped brokerages grow and shave some costs through consolidation.

Aon Corp. was built through more than 400 different acquisitions over the years. Hub International, a Chicago-based brokerage firm, also has grown through deals over the years. It was recently acquired by a team led by private-equity firm Apax Partners.

USI was purchased this year by Goldman Sachs' private-equity affiliate. Blackstone this year bought Alliant Insurance Services Inc. in partnership with management and employees. Alliant itself had recently completed its own acquisition of another brokerage's U.S. operations.

There also is a history of private-equity firms buying a brokerage and eventually taking it public. Kohlberg Kravis & Roberts bought Willis Group Holdings Ltd. in 1998, and then had an initial public offering in 2001.

But Lockton has generally avoided acquisitions, preferring to grow organically by hiring more brokers and having those brokers draw in more clients.

The one major exception was a deal that helped to position the firm to contend with larger rivals now. Lockton had long relied on a London-based unit of a South African firm to arrange insurance coverage for its clients that had operations overseas. Last year, it bought that unit for about $160 million.

"This was probably our one last opportunity to protect our global service capability," says Mr. Lockton. With the deal, rivals could have a harder time poaching Lockton clients by showcasing their own geographic reach.

Write to Liam Pleven at liam.pleven@wsj.com