Milking the Meetings
If your firm is like most, you receive calls monthly and maybe even weekly from representatives or outsourced bird dogs for the buyers within the industry. Most of the serial buyers approach an acquisition pipeline the way you would train your producers to develop their new business pipelines.
They want to get a foot in the door and find a wedge.
The good news is that meetings are harmless and ultimately should be viewed as an opportunity. The buyer (or their representative) has a few different objectives. They want to spend some time getting to know your firm so they can better understand how you would fit within the buyer’s footprint. Additionally, they want to try to articulate their story to you. They know that you are likely not currently for sale. The buyer’s goal is to leave you wondering and questioning if the future could be better. They recognize, however, that their likely best-case scenario is to be your first phone call in the future if you decide selling is your best option.
The better news for you is that these meetings give you an opportunity to continually gain market intelligence. You can leverage the discussions to better understand the capabilities and processes that the buyers are deploying in your region. It allows you to develop relationships with multiple firms and prepare for a future that may, in fact, come. Insurance agencies are fortunate to have such a backstop to perpetuation. Internal processes often hit a roadblock, and having the ability to reach out to an old acquaintance could be valuable.
The moral of the story is that it’s important to remember that sometimes a meeting is just a meeting. Remember that, while it feels good to be wanted, you are likely not the only firm that has received a call from a buyer looking for a meeting. Some firms are scared to take the meeting for fear others (internal employees, peers or competitors) might think the firm is for sale. I view this as a lost opportunity. Take the meeting, whether at The Council’s Insurance Leadership Forum event or in your hometown. Gain market intelligence and position yourself for any path in the future.
August ended the summer strong with 20 transactions, bringing the annual total to 186 deals. This still represents the second-highest eight-month total in the last decade. Only 2008 had more transactions through August (195).
Arthur J. Gallagher (AJG) took the pole position as the top buyer with three transactions in August, bringing its annual total to 16. Two of the transactions were property-casualty firms, and the third was an employee benefits agency. Overall in 2014, AJG has acquired nine p-c firms, five benefits firms, and two multiline agencies. Ten of its target acquisitions were retail and six were wholesale as it continues to look for opportunities in all realms of distribution.
AssuredPartners fell out of the first-place spot for the first time this year. Its yearly total remains at 14 as it did not complete a transaction in August. Hub International acquired a p-c firm in Florida, bringing its year-to-date total to 11 U.S.-based deals. New to the top five, Acrisure completed its eighth transaction of the year, putting it in a tie for fourth place with Marsh McLennan Agency, which has not announced a transaction since June.
Overall activity remains steady. It continues to be a seller’s market with buyer demand significantly outpacing supply. Market conditions continue to put sellers in strong negotiating positions, and deal terms remain favorable. As the cost of capital remains low, independent agencies are also gaining traction in attempting to drive acquisition opportunities to help complement a strong internal organic growth culture. There appears to be no significant slowdown on the horizon.