The X Factor

For someone whose name is on the front door of a pretty big insurance brokerage, Glenn Horton spends a lot of time thinking about how to get his business into the hands of someone else.

And no, not the big boys, those acquisitive industry giants that have been rolling up mid-sized firms with vigor in recent years. Not his family, either. Instead, Horton, the president and CEO of Orland Park, Ill.-based brokerage The Horton Group, is working on something much more unusual: handing off the company he built to a whole generation of younger employees.

It’s a long-term play, a process Horton has been working on for years and likely will be for another decade to come. That process pervades much of the way The Horton Group does business—Horton calls perpetuation “a fundamental goal of ours”—and it comes from the top.

Horton has spent his entire career at the agency, building it from nine employees to about 300. His father and uncle started the firm in 1971, and Glenn started working there in 1978, thinking it would be a summer job between college and law school.

“I just never left,” he says.

Horton decided he preferred business to law school, and he particularly liked the diversity of opportunities he found in insurance. Four years later, when his dad and uncle were ready to retire, Horton decided he wanted to step into a bigger role. So he and business partner Frank Poppie bought the firm.

“Bought is a figure of speech,” Horton says. “We paid over time. No money down and forever to pay. We got a deal that we wouldn’t have gotten from a stranger.”

Either way, they took an aggressive approach to growing the business, hiring producers and adding more specialties. By the mid-1990s, annual revenue was about $5 million. Then, for a decade or so, the company went on a run of acquisitions, trying to grow big enough to compete. Today, The Horton Group generates about $50 million in annual revenue, selling policies across a wide range of industries—from healthcare to thrift shops to welding equipment suppliers—and ranks among the 50 biggest brokerages in the country.

In the last few years, the company’s focus has turned back to organic growth. That’s partly because of the economy, Horton says, and partly because the price of acquiring has climbed as other avenues for growth have dried up. But it’s also part of his long-term perpetuation strategy.

“In an acquisition, you’re likely to get someone who’s similar in age to you,” Horton says. “You can’t really acquire future generations.”

No, you have to grow them.

That’s been a big part of Horton’s efforts lately. The company runs a lot of training programs and looks for hires who are interested in the long haul. In 2010, Horton hired a chief sales officer—Steven Topel—to focus on boosting organic growth and developing new producers. Those producers, notes chief operating officer George Daly, are the future of the business. Helping them understand the company and helping them become successful while they’re at it are essential to staying independent.

“If your goal is to perpetuate the agency, it needs to come from a generation of people who are writing the business,” Daly says. “That’s what’s going to give them the capital to buy stock.”

So far, the strategy seems to be working. While Glenn Horton is still the firm’s biggest owner, The Horton Group is held by a lot more hands than it used to be. In 1995, four people owned the whole company. Today, shares are spread among 40 people—about 10 of whom own roughly 70% of the company.

“We’ve probably turned over 40% of the stock in the last 10 years,” Horton says. “And we’ve modeled out more over the next 10 years. From an ownership point of view, I’m quite confident we’ll be able to perpetuate.”

He has tried to design the agency’s corporate structure to outlive his involvement as well. Horton has had an outside board of directors for about a decade, and its governance structure is modeled more like a public company is than that of a family-owned firm. The company shares information about its financial performance with employees—and clients—and hires an outside firm to audit its statements each year.

But perpetuation is not just about stock ownership and governance. There’s leadership development, too, and a big component of that is trust. Horton says he’s tried to take less of a hands-on role in the day-to-day operations. It can be tempting to dive in, he says, but he’s trying to develop new leaders.

Those leaders, like Daly, say Horton’s willingness to have faith in their abilities is refreshing.

“That’s Glenn’s leadership style,” Daly says. “He doesn’t spend time micromanaging. He’s someone who trusts his people, and that trust goes a long way.”

Rob McIntyre, president of The Horton Group’s branch office in Waukesha, Wis., says his boss shows his trust in other ways, too. The company brings in a lot of speakers, coaches and consultants to talk with the executive team and sales force. Horton takes an active role in these sessions and learns just as much as anyone else. That can send a powerful message, McIntyre says.

“Glenn has mastered this concept of being vulnerable. He’s willing to expose his personal opportunities for improvement, and that serves to motivate others to do the same,” McIntyre says. “Many leaders don’t have the confidence to do that sort of thing, but Glenn’s comfortable in his own skin.”

There’s something else to know about Glenn Horton. He is a very early riser. Like, 3 a.m. early.

That’s about when he gets up most days, he says. He “plays around with the computer” for a bit, then works out either at home or at the gym, which he notes with a hint of disappointment in his voice “doesn’t open until five.” Either way, he’s at work by 6:30 most days.

“That early thing is important in my life,” Horton says.

Although it can be a bit intimidating, admits Daly. You get to the office early, and not only is the boss already there, but you know he’s already gotten in a workout, too.

Daly still remembers his first week with the company. He and Horton had to drive up to the Milwaukee office for a meeting, and Horton wanted to be there when it opened.

“He said, ‘I’ll be over about 4:45,’” Daly recalls. “I said ‘Oh. OK.’ I had to act like it was no big deal.”

Even the ability to drive to Milwaukee before most folks have had breakfast plays into the plan for The Horton Group. Much of the firm’s business, and five of its six offices, are within a few hours’ drive of its suburban Chicago base. Horton puts about 25,000 miles on his car a year, heading to Wisconsin or northern Indiana or elsewhere to check in.

The ability to drop by for a meeting, without the hassle and expense of flying, means more face time, more development, deeper relationships, and—the hope is—a more sustainable business.

“At the drop of a hat, we can physically be in any of the different offices,” McIntyre says. “We do have video conference equipment. But it doesn’t get used all that much, in favor of people hopping in the car and meeting face to face.”

Some people might say the geography of his agency is limiting, especially as it grows. But the region has a big and diverse enough economy, and Horton offers a broad enough book of business, that the Great Lakes provide plenty of opportunity, he says. And proximity has its advantages.

“‘If we can touch Lake Michigan’—that’s basically how we define our market,” Horton says. “We don’t want an office anywhere you can’t go and drive back in the same day. There’s a benefit in being able to reach out and touch.”

And that benefit isn’t just internal. Folks at Horton make the case that all this communication and planning for the future helps clients, too.

For one thing, the firm knows its turf. In big, general sectors of the business—like, say, policies for construction companies—being local helps Horton beat out bigger rivals who might just have a branch office in town. For more specialized lines of insurance—welding supply, for instance—there are relatively few customers in any given market. But by knowing the industry well, Horton can compete on a national level. They just have to pick their spots.

“We feel we can be really good players in certain segments,” Horton says.

And regardless of the field, Daly says, the focus on perpetuation gives Horton an edge. That chance to own a piece of the company, to be a part of building something for the long run, gives employees an incentive to focus on the well-being of customers, too. And it lends the whole operation a sense of stability in an industry where a lot of people have been through at least one merger.

“That is so refreshing for employees,” Daly says. “You don’t want there to be no plan in place. You don’t want to wake up one day and find out you’re working for somebody else.”

Over the years, Glenn Horton has had his share of offers—a mid-sized brokerage with a strong regional footprint would be an attractive acquisition for many buyers—and selling would be a way to cash out. But it’s not something he’s ever pursued. Horton says he and the other owners make a comfortable living, and cashing out isn’t the point.

“I don’t really expect to ever get my money out of this place,” he says.

No, Horton plans to keep working on his perpetuation strategy. He figures he’ll work for another 10 years or so, continuing to spread out ownership and management expertise and growing the firm organically. His name will likely live on—Glenn’s son Dan Horton is a sales executive in the Milwaukee office—but, more importantly, so will the company he’s worked to build for 30 years.

“For as long as I’ve been in the industry, people have been writing and saying that the independent agency is a dinosaur and destined to fade,” he says. “But I really like our position.”

It would be a somewhat rare feat, but Horton is confident he can pull it off. For that matter, so is Daly, mostly because of the man who’s trying to make it happen.

“The thing that really means the most to Glenn is that he wants to remain independent,” Daly says. “And that’s what’s going to happen.”