Agency Consulting Group, Inc. is the acquisition manager for several agencies around the country. Our role is to find agencies who are compatible with our clients and create relationships that result in eventual acquisitions of books of business, expanding geographic platforms and talented people. We do this because most agents are better at selling insurance than at buying other agencies. However, there are many agency owners who COULD establish and implement marketing programs to bring acquisition opportunities to fruition. This article will show you how it can be done.
First you must establish the reason you seek acquisition.
If you have sufficient staff to satisfactorily handle a greater number of clients acquisition is a potential way of quick growth. But if your staff is already stressed, what is several hundred or thousand additional customers coming on the same day going to do your organization?
Acquisition for talent has grown to be the number two reason for these transactions. If you can absorb young, experienced service, sales, or management staff through a reasonable acquisition, it often means more than the revenue they bring with them to the future of your own agency. However, if someone is retiring and the staff is of the same age or unresponsive to customer needs, an acquisition could dig you a deeper hole from which you will have difficulty extricating yourself.
If you’ve absorbed as much as you can in your territory (i.e. rural communities or counties) expansion through acquisition in an adjoining territory could be a logical way to expand in the long term. Modern automation and telecommunications can expand your agency geographically without the need for substantial secondary office staff, if any.
So the good reasons are expansion, buying talent that you can’t otherwise attract and strategic growth within the boundaries of your staff capabilities.
Once you have given yourself a good reason for acquisition and have the wherewithal to accomplish a transaction (money is easy to get if the cashflow exists to repay it- call us for more information) the method of marketing for acquisitions is much like the classic method of marketing for new clients. The steps are:
- Create the model of your perfect acquisition – in terms of size, disposition of the owners, staffing, client split (PL/CL/L&H), etc. You will likely not fall into the “perfect” situation, but knowing what would be right for you is a logical first step to keep you away from attractive opportunities that don’t at all fit your own perfect model.
- Find and visit agency owners – no letters, no phone calls (how would you like to meet a potential suitor through a letter or phone call?). Drop in looking for the agency owner (do your research – this is NOT the time to ask an employee who they work for…) and tell him that you’ve known about him for years and have never had the opportunity to really get to know him. Some will immediately sense why you’re there and will simply say “I’m not for sale”. Your response should be, “Neither am I. But for as long as we’ve been in business I’ve known about you and I thought it was far too long not to know each other.” YOUR PURPOSE IS PURE – YOU WANT TO GET TO KNOW HIM TO EVALUATE WHETHER YOU ARE CLOSE ENOUGH IN YOUR PHILOSOPHIES TO BECOME FRIENDS AND POTENTIAL ASSOCIATES. NEVER, NEVER, NEVER MENTION ACQUISITION.
- If the contact with the agent is uncomfortable or you feel something is wrong or if you simply don’t share the same values, don’t plan a return visit.
- If you feel good about the agent, invite him to visit you next time and offer to buy him lunch – just to get to know one another
- Perform the same action to as many as 12 agents within the area in which you reside or would like to expand.
- Visit every agent that you haven’t eliminated as not a potential for you (lack of “fit”) once every quarter just to keep in touch. Have lunch or a cup of coffee. Your agenda is to determine if you can help him in any way. Be open and friendly. And when the normal question arises and the agent complains about markets, business, clients, carriers, or the state of the world, in general, your response MUST always be “Things have never been better at our agency.” After all why would any agent want to associate with someone else who is in the same condition or worse than he is himself?
We have found that if an agency owner visits other agency owners several times each year that within a short period of time one or more of the agent friends will need help and those who are in the position to retire will think of YOU when they are doing so. Your attitude will always be, if we can do anything to help you or vice versa, let’s do things together.
During this entire process YOU have never raised the issue of acquisition. But if the other agent raises that subject, tell him that you would be honored to be considered in his Perpetuation Plan and either begin your Due Diligence or call Agency Consulting Group, Inc. (856-779-2430) to enter the fray and value the agency and perform the Due Diligence.
This process may not yield quick results but, if you keep a dozen agencies in your sphere of influence and visit them regularly, you will eventually generate an acquisition every year. Most agencies would find it very difficult to absorb more than one acquisition at a time or over the course of a year.