Halt the What-Ifs

Is now the right time? The stress that leaders shoulder in today’s market can feel paralyzing.  

Is now the right time?

The stress that leaders shoulder in today’s market can feel paralyzing. The phone is ringing, and buyers (or their hired guns) are on the other line. Will you sell the agency? Now is the time, these investors encourage.

Meanwhile, the property and casualty market continues to decline, suffocating organic growth and making higher margins feel impossible. If you renew the same account that has been loyal to your agency for years, it will bring in less revenue. The frustrations of a softening market have a deep impact.

You know you’re not getting any younger.

You have nurtured the agency for decades, hired good people and supported the community. This business is your baby.

There’s pressure to sell now and capture the market while it’s at a high watermark—or focus relentlessly on perpetuating the agency. That means predictable and profitable organic growth, investing in technology, developing people and possibly shifting the culture completely. You’ve been at the business for a long time, and the task at hand seems exhausting.

Through it all, you keep wondering if now really is the right time to sell the agency. It’s a nagging question that keeps you up at night because the answer is not as simple as, “Sure. The buyer’s offer is outstanding, and the opportunities are plenty!”

The reel of what-ifs keeps churning.

What about the kids? Will you wait until a child is prepared to take over the business? What if he or she decides to go a different direction in life after all? Which child should be in charge? Many owners are concerned the decision could cause a rift in the family.

Most owners are very concerned about their employees and the culture they have created. They wonder what will happen to their people if they agree to an offer. What will happen to the sense of community? What about their reputation? Owners struggle with the potential hit to their image if people think they’ve sold out.

This dynamic push and pull creates internal turmoil for leaders. There’s no resting easy. There’s no wait-and-see. You’ve got to hunker down and focus on predictable, profitable organic growth annually to thrive and perpetuate or seriously consider trying to capture the high valuations and taking advantage of the variety of buyers in today’s market.

But first, you must stop.

Take a deep breath. Step away from the everyday activity of the business and check the emotional baggage. Remove yourself from the tangle of thoughts that include obligation, guilt and anxiety—press pause on the what-ifs for just a moment. If you can’t do this alone, enlist someone who can help you take a candid look at what’s really going on. View the scenario through an unfiltered lens. Face reality head-on.

What’s real for many sellers is the value that exists in today’s market versus the uncertainty the future holds. Also, unlike other sellers markets, this is an interesting environment where most sellers have a lot of buyer options.

You can narrow down a pool of willing buyers, identify an ideal fit and look to maximize the investment in your agency from a monetary perspective because of today’s high valuations.

Or you commit to growing your agency. You know you should write 20% new as a percentage of your prior year commissions and fees every single year to help secure organic growth in and out of cycle. You’ll need to keep a relentless focus on recruiting and developing strong producers and leaders who can help perpetuate the agency. All of this is possible, and we are seeing successful growth in agencies using these strategies.

Regardless of what decision you make, we believe the most important thing leaders can do when feeling overwhelmed with opportunity and demands is to step away from the business.

It’s like getting a good night’s sleep before an important meeting so you can think straight. If you hop off an overseas flight and head right into the conference room, your perspective and thoughts are foggy. You’re not as sharp.

Our emotions have the same effect on decision making when we consider today’s opportunistic market and the challenges we face in our business.

Stop. Step away. Evaluate the reality. Then move forward with a strategic plan that will help you realize your end goal.

July 2016 Market Update

Insurance brokerage deal activity decreased in July compared to prior months and July 2015. There were 29 domestic insurance brokerage acquisition announcements in July, compared to 33 in June and 39 announced in July 2015. AssuredPartners announced six deals during the month, more than any other buyer (Hub International and BroadStreet Partners each announced three). It has also announced the most acquisitions year to date, at 20.

Kohlberg & Co., the New York-based private equity investor in Risk Strategies, announced in July its investment in U.S. Risk Insurance Group, a wholesale brokerage with 16 locations in the U.S. and internationally. The investment is expected to support U.S. Risk’s future acquisition and growth strategies.

Interestingly in July, there were two announcements of acquisitions of and investments in insurance marketing groups. California-based private equity group HGGC announced it invested in Integrity Marketing Group, which develops and distributes life and health insurance products, and acquired Premier Companies, an insurance marketing organization. Futurity First Financial Corp. announced it acquired M3 Financial, a national firm focused on annuity and life insurance distribution.