M&A Deals Begin with Messaging

The insurance brokerage deals market was incredibly active in 2024, with a twofold increase in the number of announced transactions in the closing six months of the year. This momentum is expected to continue into 2025.

This isn’t news to acquisitive brokers. In fact, it’s probably front of mind for you and your colleagues. You know this means that your brokerage may have increased competition and that target agencies will have more options.

Your brokerage needs to make itself more attractive to those agencies. This is where it’s crucial to craft messaging that speaks to how M&A can mitigate the challenges agencies face from evolving industry forces while driving business growth and profitability.

Messaging Matters

An M&A deal is a two-way street. For the deal to succeed, buyer and seller must be equally sold on the other. This requires demonstrating that your brokerage encompasses what matters most to your target agency.

Highlight your brokerage’s culture as a place for careers to flourish and business to grow. Non-cash benefits are also important to agencies. These could range from profit-sharing, stock options, or long-term growth incentives to internal agency knowledge and leadership. Of course, the overall price of the deal is important, but these additional benefits are enticing to agencies as they consider what their future looks like with your brokerage.

Carrier agreements should also be included in your messaging. Agencies don’t want to negatively impact their existing agreements, but joining your brokerage could offer additional carriers or better terms. Today’s market can be challenging, especially as agents look to remarket accounts. Having more carriers for business placement can help an agency retain customers and keep a healthy revenue stream.

Technology may not be high on your list when considering an agency for an M&A deal, but don’t leave it out of your sales pitch. Here’s why technology could be an attractive factor for an agency.

Tech Should be High on Your Sell Sheet

Many of an agency’s challenges are rooted in lack of automation and connectivity. Lack of connectivity with carriers creates inefficient quoting processes that require visiting multiple carrier portals and repetitive data entry just to quote a single account. Waiting for paper checks to be delivered in the mail and then manually reconciling them to the appropriate account delays payments and costs the agency money. And not having a central management system results in unnecessary paperwork, difficulty sharing information, and data that cannot be used to generate helpful business insights.

These challenges—and the myriad of others that stem from lack of connectivity—ultimately make it harder for agencies to grow their business and provide the best possible service to their clients.

A great tech stack can eliminate these issues and drive efficiency and profitability. But smaller agencies don’t always have that tech stack. Maybe they’ve considered building out their technology, but the cost or fear of change stood in their way. They may want to modernize their business but aren’t sure what they need or where to start. Others may have tried to build a tech stack but the platforms don’t speak to each other, resulting in disjointed workflows that eat up time.

Use your technology to your advantage. Invite target agencies to tap into your tech stack so they don’t have to build their own. Your messaging should stress that your brokerage is on a consolidated tech stack that can help their team become smarter, better, and faster. This increased efficiency will reduce operational costs and drive revenue, as well as give team members more time back to focus on clients.

How You Use Technology Matters

Agency management systems (AMS), customer portals, marketing automation platforms, digital payment hubs, document management, and form submission platforms are all incredibly useful tools, especially for an agency just starting out on its tech journey.

Many agencies may already have bits and pieces of this tech stack, so it’s more important to stress how to use the tools rather than which to adopt. Show agencies how you are using your tech stack to complete the digital round trip of insurance.

Start from the beginning with your AMS. Explain that this is the technology foundation to leverage essential tools including customer relationship management, sales automation, financial accounting, reporting, and policy administration. A platform with open and scalable technology supports the integration of all the other pieces of the agency’s tech stack to allow seamless workflows between applications without ever leaving the core system.

From there, data flows directly into your application and submissions management or quoting platform, depending on the complexity of the risk, eliminating the paper applications that insureds previously filled out for each carrier quote and reducing the time agents spend rekeying data and searching for markets. Ever-changing consumer expectations and carrier appetites, along with shorter quoting windows, have made these processes challenging for agents in recent years. It’s important that you help your target agencies understand how carrier connectivity alleviates these challenges by enabling them to search for markets and quote business much more quickly, while providing more coverage options for clients.

Once a policy is quoted and bound, clients must pay. This is inconvenient for insured clients who must write and mail a check. And agencies face delays waiting for those checks in the mail and then manually processing payments. Meanwhile, coverage is delayed until the agency can pay the carrier. Digital payments hubs that connect to the AMS automate payment collection, processing, and reconciliation while providing an effortless, modern checkout experience for insured clients.

This payment information feeds directly back to the AMS to complete the digital round trip. A tech stack that automates the flow of data into the AMS gives the agency a bird’s-eye view of its business and the ability to collect valuable data to guide decision-making.

Smaller agencies know that tech can be valuable to their day-to-day processes. They may need help in seeing the bigger picture of how it can fully connect the insurance life cycle.

Lead the Change

Change management can be the hardest part of adopting new technology. It’s often what keeps agencies from building or upgrading their tech stack.

Large brokers that regularly onboard new agencies have significant experience dealing with the growing pains of integrating technology. Use your expertise to your advantage. Your wealth of knowledge and leadership in this area is a selling point for target agencies if you message it correctly.