What Do You Value Most?

Selling your firm can be a daunting task. The process is overwhelming, and the number of buyers makes the choices endless. 

How do you whittle down the list? It’s important you take inventory of what is most valued by you as you evaluate your potential new partners. When determining the best fit, consider the following:

Do you want autonomy or resources? In a perfect world you can have both. However, that is not always the case. Usually the more resources you get, the less autonomy you have. Now don’t get me wrong. You are likely being acquired because there is something unique about your firm or your ability to lead, so you can still achieve a certain level of autonomy even in the firms whose cultures are governed by more rules and regulations.  

It’s just as important to recognize autonomy is only a promise if you perform. If autonomy is your preference, you typically are left alone. However, there is an expectation you will achieve certain growth or profitability hurdles. If the hurdles aren’t met, you usually lose control of the office or firm that was once yours.

Do you want a new name to get you more credibility, or is your local brand of the utmost importance? Name recognition can go a long way. How many times have you walked into an account when you know you had the better solution and the prospect knew the same but still chose to remain with their incumbent because they could not risk their job by working with a local brand? Being part of a national or international umbrella can truly make the difference in winning or losing business. Many firms strongly consider the new business opportunities that become more realistic once you have the backing of your new partner and the reputation of their name.

Alternatively, some buyers will allow you to keep your name. Others go as far as not even announcing the deal to the public. This allows you to continue to operate as if the transaction never occurred. Your clients and the community may never become aware. This is an important aspect of a transaction and should be flushed out during initial conversations with potential buyers. You need to ensure you understand what will be required of you and in what time frame post-close.

Whom will you be reporting to? We are often asked, “Which firm has the best culture?” or “Where do we believe our clients will fit in best?” Each buyer has a specific culture. However, what sometimes gets lost is a true understanding of what your reporting relationship will look like when your deal is finalized. It has likely been a number of years since the president and CEO of a seller has actually worked for someone in a direct reporting relationship. This is one of the transitional areas that sellers typically struggle with most. They are used to being their own boss, and this change can be challenging. It’s imperative you evaluate the personality and management style of your new boss. In most cases, you will be reporting to a regional leader for the parent firm. Make sure you have time to meet and get to know this individual. The culture of the firm you choose may be right on point, and you may easily align with the executive leadership who were a part of your recruitment process. However, if you do not feel in sync with your new boss, seller beware. 

There are many similarities across the buyers in today’s marketplace. Try to understand the differences when narrowing down your selection. But probably most importantly, understand how you and your staff will adapt to your new environment to ensure the appropriate match.

The Latest Deals

January posted solid results with 34 announced transactions. This equaled our December total and continues a steady trend of monthly results in the high 20s or low 30s. It did, however, miss the mark of January 2014, which concluded with 41 transactions.

AssuredPartners jumped out of the gate with three January deals. It acquired retail shops in New York, Florida and Kansas. Only two other firms completed two deals this month. The Andrews Agency acquired two other Virginia-based firms, and the Leavitt Group completed transactions in Montana and Colorado. 

The largest announced deal goes to Alliant. QBE announced it will sell its U.S. agency businesses to Alliant in a deal valued at $300 million. The agencies being bought include Community Associates Underwriters, Deep South Insurance Services and SIU Managers in California—all wholesalers.

Last year is only the second year the number of M&A deals exceeded 300. Look for the trend to continue as deal activity continues to be strong and buyers’ pipelines hold more opportunity than at any other time in recent memory.

AUTHOR’S NOTE: I have been asked many times by buyers to include deals they have completed but not publicly announced. Our policy is to track only publicly announced mergers and acquisitions. While firms may wish to announce a total deal count, we will not use any information in our tallies until we can independently substantiate every deal. If you have any specific questions, please email me.

Phil Trem is vice president, Marsh, Berry & Co. [email protected]