Leaders Edge Q&A: Give us an overview of some important M&A trends going into 2024

Leaders Edge Q&A: Give us an overview of some important M&A trends going into 2024 2560 1708 nickb@startupselling.com

Vantage Insurance Partners founder and CEO Alex Panlilio talks to Leader’s Edge about some of the important mergers and acquisitions trends for 2024.

Leaders Edge Q&A: Give us an overview of some important M&A trends going into 2024.

2023 saw fewer deals compared to previous years as a lot of very active buyers were surprised by the sudden interest rate spike at the end of 2022. Many of the traditional buyers are further prioritizing operational efficiencies and cost synergies to improve margins as a mitigant against their increased cost of capital for acquisitions.

Leaders Edge Q&A: Private equity backed insurance agencies have been very active in the M&A space in recent years. How do you see them navigating this current economic environment?

PE-backed agencies are typically more acquisitive than their non-PE-backed counterparts, with complex yet optimized capital structures and institutionalized controls in place. Despite challenges, there’s still a mandate to keep growing, so their acquisition activity will ramp back up in 2024 with a renewed confidence, balanced with cautious optimism.

Leaders Edge Q&A: For the acquirers that pitch autonomy, and no post-merger operational integration, can you still achieve cross-organizational effectiveness?

I believe buyers need to have a clear and distinct messaging around the level of autonomy after a sale. Operating as one firm becomes unwieldy and the ability to scale becomes a challenge. So, there’s a crucial need for some level of integration and centralization, especially for financial controls and consolidated data around your book of business.

Leaders Edge Q&A: What advice would you give to sellers or agency owners who are looking to sell in the near term? How can they position themselves to make sure they achieve the highest valuation possible?

My advice to optimize your firm’s valuation is to start by proactively recognizing your identity, culture and goals and then seek partners aligned with these aspects. The initial assessment should prioritize these factors over cash flow or EBITDA, as financial aspects will optimize themselves when sellers don’t make valuation the leading point in their approach to finding a partner.

Leaders Edge Q&A: What headway has Vantage made in the M&A space recently?

We have been very active in finding high-quality platform partners as well as many subacq partners under our platforms. Our platform partners stay economically aligned as we buy a majority stake in their firm, while they maintain a personally meaningful (direct) minority stake. Partnering with us enables our platform partners to become more acquisitive as we become their M&A arm—we build their subacq pipeline, conduct due diligence, structure, finance and integrate the deal.

Leaders Edge Q&A: What headway has Vantage made in the M&A space recently?

While our primary focus is on acquisitions, we prioritize a balanced approach between organic and inorganic growth for our partners by providing operational and organic initiatives to supplement their efforts. Our platform partners continue to maintain significantly high organic growth rates, well above industry average. This success stems from our partners’ strong economic alignment with us and their control over their businesses, ensuring continued growth in a sustainable fashion.

Learn more about the Vantage model

How to Create a Strategic Plan for Your Agency

How to Create a Strategic Plan for Your Agency 2560 1709 Andrew

Creating better strategies for your agency means understanding your market, optimizing your processes, improving the customer experience, staying updated with industry trends, and maintaining a competitive advantage with substantial resources. Here’s a step-by-step guide to help you develop effective strategies:

  1. Ongoing Market Research and Analysis:
    • Identify current and emerging market segments and their specific insurance needs.
    • Analyze your competitors’ strengths and weaknesses to uncover gaps in the market.
    • Study industry trends, regulatory changes, and emerging technologies that could impact your business (EVs, VR, AI, cloud data, smart devices, etc.)
  2. Clear Value Proposition – Ensure your value proposition continues to be relevant.
  3. Digital Presence and Marketing:
    • Build a strong online presence through a professional website, social media, and online advertising.
    • Utilize content marketing to provide valuable information to potential customers and establish your agency as an industry expert.
  4. Technology Integration:
    • Implement modern insurance agency management software to streamline operations, track policies, claims, and customer interactions.
    • Explore tools for data analytics to gain insights into customer behavior and market trends.
  5. Customer Experience Enhancement:
    • Focus on delivering exceptional customer service at all touchpoints.
    • Offer digital self-service options, easy claims processing, and responsive communication channels.
  6. Training and Development:
    • Invest in continuous training for your team to ensure they are knowledgeable about the latest insurance products and industry regulations.
    • Enhance their communication and interpersonal skills to better connect with customers.
  7. Networking and Partnerships:
    • Build relationships with other businesses that can refer customers to your agency.
    • Collaborate with complementary services, such as financial advisors or real estate agents, to expand your reach.
  8. Feedback and Continuous Improvement:
    • Encourage feedback from customers and your team to identify areas for improvement.
    • Use data-driven insights to refine your strategies and optimize your processes.
  9. Measurement and Metrics:
    • Define key performance indicators (KPIs) to track the success of your strategies.
    • Regularly analyze KPIs and adjust your strategies based on the results.
  10. Adaptability and Flexibility:
    • Be prepared to adapt your strategies as the market evolves, ensuring your agency remains relevant and competitive.
    • Build and leverage resources to offer unique and competitive solutions.

Whether you’re looking to maintain or grow, shift or persevere, Vantage can help. With the right partners, partial acquisition can lead to many opened doors and new opportunities. Want to know more about how you can grow and compete while preserving your agency culture and identity? Explore it here!

How to Build a Succession Plan

How to Build a Succession Plan 2000 1999 Andrew

As time passes, we look forward to different things in life. Every agency will face changes in leadership as founders and partners look to partially or fully retire. Planning for the future success of your agency helps secure what you’ve built, your ongoing financial well-being, and that of the people who will continue to work at the agency for years and decades to come. So how can you plan for the future?

It begins with identifying your specific goals for the agency. Do you want to grow? If so, how much? Do you want to maintain, change, or expand your services? What resources will you need to accomplish this? Will you benefit more from an internal transition or an external sale? What do those scenarios look like? Are there other options?

Internal transition can reduce the churn and trauma for an agency. Relationships are already established, the culture and expectations are known to all, changes will generally occur at a slower and more stable pace, and there will likely be less turnover. External sale can bring new ideas and resources to the table. New leadership tends to help bring in new business, new teams, and new strategies, often at the cost of losing old/current clients, team members, and institutional knowledge.

A third approach is partial acquisition, in which a portion of the agency is sold to a larger entity that can introduce new resources. Yet this path also involves internal transition, as leadership and agency culture stay primarily localized, rather than becoming absorbed by a single large organization.

Which path will best fit you? That can depend on the current talent in your agency and the strength of your sales pitch to external entities. But if you’re looking to grow and gradually divest while maintaining a culture you’ve nurtured and teams you’ve built over years, partial acquisition is often an ideal solution.

To be a good candidate for partial acquisition, you’ll need to be a market leader in your sector, geographical area, and specialty. Want to learn more? We’re happy to help you assess your situation.

Building the Brokerage of the Future, Part 3: Vision

Building the Brokerage of the Future, Part 3: Vision 1707 2560 Andrew

Brokers must now contend with new and complex challenges, adapting to meet shifting demands from clients, markets, employees, and regulations. Vantage Executive Chairman Anthony Gruppo says, “Where I believe the industry has to evolve is to the ‘boardroom of the future’. Your meeting with the client doesn’t just have sales and service there. It has operations talking about how to deliver the best possible solution. It has finance asking how the client wants their bill to look and when they want it to come. When all those disciplines work together, there are no silos—just platforms of greatness.”

Integrating services across departments and cultivating talent from within your organization lead to a more efficient, effective, and forward-looking brokerage – and a better client experience.

Founder & CEO Alex Panlilio concludes that these insights come from his experience forging partnerships with brokers. “All of our advice on this isn’t really advice. It’s a representation of the type of partner we look for at Vantage—one who has this longer-term collaborative view in their organization—because the ability to add value organically is just as important as inorganic growth and acquisitions.”

The Vantage partnership provides economically aligned perpetuation for entrepreneurial firms:

  • De-risk and partially monetize your equity stake
  • Continue to share in your firm’s annual profits and future equity growth
  • Leverage our M&A expertise and capital to accelerate your growth through acquisitions
  • Maintain operating autonomy as a direct equity owner of your firm
  • Benefit from additional capital investments

Where is your brokerage headed? Who will help you get there? If you’re ready to see the future, visit our website and get in touch!

Building the Brokerage of the Future, Part 2: Cultivating Talent from Within

Building the Brokerage of the Future, Part 2: Cultivating Talent from Within 2560 1758 Andrew

Brokers face consolidating competition, shifting regional and global markets, an evolving workforce, and an increasingly discerning customer base. More than ever before, the challenge lies in developing and nurturing a business model that fosters long-term, sustainable growth. For Vantage founder and CEO Alex Panlilio and Executive Chairman Anthony Gruppo, the answer is in the sales process. Rather than being purely transactional and focused on closing, Panlilio and Gruppo contend that successful brokers are converting to a more consultative model. In this model, nurturing in-house talent, building deeper and more diversified relationships with clients, and unifying the sales and service processes is fundamental.

Gruppo outlines what he sees as the most important talent building blocks for a transactional-to-consultative conversion. “Leadership development is critical. There are a lot of organizations that don’t know the full extent and breadth of talent working for them.” Understanding employees and the talents they already possess empowers a firm to cultivate and elevate leaders from within. Another building block, tightly linked with leadership development, is mentorship programs and career planning. When newcomers join your team, they have a career path and a mentor alongside them—so you develop a bench of future leaders.

Panlilio adds “the final part of building a talent pool for the consultative model is diversity, inclusion, and accountability. The best organizations are the ones that recognize these factors. We can see a lot of correlation between business results and when leadership teams are performance-based and transparent throughout the entire organization.” Understanding the strength and complexities of diversity in your current and future team and how communication is perceived will dramatically improve the efficacy of teambuilding, talent acquisition, and client satisfaction.

Building the Brokerage of the Future, Part 1: Integrating Sales and Service

Building the Brokerage of the Future, Part 1: Integrating Sales and Service 2560 1707 Andrew

In the face of consolidation, shifting markets, an evolving workforce, and increasingly varied customer demands, the brokerage business model must adapt. Vantage founder and CEO Alex Panlilio and Executive Chairman Anthony Gruppo believe that the insurance sales process can no longer be purely transactional and focused on closing, but rather that successful brokers are converting to a more consultative model that better integrates sales and services.

Panlilio states “you have to make sure service doesn’t become the stepchild of your sales process. It’s probably even more important than sales—what good is getting a new client if you lose them after a year? But if you have high retention, there’s a smaller hole you have to initially fill in before hitting your organic growth target the following year. And that’s really about making sure your clients are properly served. You don’t hire a broker to buy your insurance; you hire them to fight your claims and manage your risk. That’s mostly on the service side of the relationship.”

Gruppo adds “it’s an integrated system of sales and service working together, improving the relationship, and improving the product. It sounds so simple, doesn’t it? Why haven’t people done it? It’s because we put up a barrier between sales and service, and sometimes service people feel inferior and have drastically different fixed compensation structures.” To resolve that, Gruppo proposes that firms should work to tie compensation to both sales and service, rewarding both retention and sales. “Then,” he adds, “people are much more creative about finding new solutions. But when you put a barrier between sales and service systems and the systems don’t talk, the client suffers.”

Panlilio also believes a firm should not stop just at bringing down the barriers between sales and service; the culture and environment should enable and facilitate collaboration and transparency of appropriate information across every department in the firm. A foundational aspect of this concept, he notes, is recognizing the core functionality of each department while allowing members of each team to “cross-train” with other departments, providing them with further knowledge and context for their role. “You make better decisions when you have an expanded viewpoint of the bigger picture,” he explains.

How to Get Clients Interested in Risk Management

How to Get Clients Interested in Risk Management 2560 1707 Andrew

Initiating or revising a risk management program can take time and effort – is it worth it? Helping your clients and prospects understand the value is essential to making it happen. Risk is more pervasive than ever in a world of cyber-attacks, hyper-litigation, complex regulatory requirements, and unstable financial institutions. Fear and uncertainty exist in abundance today. But risk management isn’t just about avoiding or controlling potential problems – it can also be a tool to improve morale, teambuilding, and communication. This can help to diversify your message so that it’s not all doom and gloom.

Reducing workplace injuries will be a big selling point for many clients and prospects. This can lower costs, reduce liability and litigation, and boost employee moral and an organization’s reputation. This is an easy win for manufacturers, restaurants, construction companies, and many others. But some businesses aren’t exposed to significant workplace injury risks. So it’s important to assess your clients’ pressure points and target those specifically.

Cyber risk affects us all – particularly businesses that store sensitive information. These clients could suffer immense legal and financial consequences for failing to protect their data, not to mention the damage to their reputation.

Human resources can present another area of vulnerability – hiring, termination, harassment, and other issues can create legal, financial, and reputation pain points for many organizations. How are HR staff trained to handle these and other challenges?

In a more positive light, risk management can help empower team members to better understand what problematic behaviors and infrastructure imperil them collectively and how they can improve these circumstances cooperatively. Communication, team-building, cross-training, and celebrating success can bolster morale, get more eyes on the lookout for potential issues, and foster a sense of trust and community within an organization.

Analyzing which pressure points will speak to your client or prospect is essential to sparking their interest in risk management services. Some will simply want to see how much money they can save, others will want to see the bigger picture, but either way, there’s a risk management solution to fit every organization.

How Can P&C and EB Producers Work Together?

How Can P&C and EB Producers Work Together? 2560 1709 Andrew

Helping your property and casualty producers to work closely with your employee benefits producers offers a wide variety of advantages. In some agencies, these producers can be isolated or even competitive, when in reality they stand much more to gain from collaborating. Let’s take a look at the methods and advantages of building this framework.

Cross-selling is one of the simplest and most obvious advantages to P&C and EB producer collaboration. Many clients who have been happy with their property and casualty coverage might be inclined to obtain employee benefits through the same agency, or vice-versa. The leads are warm and the sales cycles tend to be shorter.

This leads to another advantage – customer service and the deepening of client relationships. When your agency has a fuller picture of the needs and priorities of your clients, and more of your team is in contact with them, you have more agency to meet (or exceed) their expectations.

Internally, when producers feel encouraged to work together, customer service tends to improve and employee morale goes with it. While commissions may go to only one or two people for a given sale, the agency as a whole thrives when any team member closes a deal. Offering a wider range of services to clients and showing them that your agency works in unison inspires confidence and pushes the conversation in a stronger direction. Instead of value-adds or afterthoughts, integrating service offerings early in the process will set expectations that your agency is prepared to deliver whatever the client needs, leading to bigger opportunities immediately or down the road.

Encouraging your producers to collaborate, especially across product lines, can open many doors for your agency. Ready to learn more? Get in touch!

Every Agency Needs a Mentoring Program for New Producers

Every Agency Needs a Mentoring Program for New Producers 2000 1999 Andrew

New producers enjoy the energy and enthusiasm of meeting people and trying things they haven’t encountered before. But they also face daunting challenges, from building professional relationships with clients, prospects, and colleagues, to learning the social and technical aspects of describing and advocating for how they can support their client’s business.

More experienced producers can help jumpstart this process by mentoring new producers in a variety of ways. From making introductions to discussing the sales and relationship-building processes, this mentoring program will make new producers effective more quickly, benefiting the agency as a whole. But it can take the mentors time and effort to accomplish this when they could be working to increase their commissions. So it’s imperative to make the mentorship program work for everyone. This might entail bonuses or extra vacation time or other incentives for mentors.

Producer mentorship, like any workplace program, needs attention to thrive. Regular check-ins with both mentor and mentee are essential to evaluating the effectiveness of the mentor, the quality of the bond and the working relationship, the teamwork potential of the mentee, and more. This not only serves to enhance and support the mentorship program, but really the workplace as a whole, helping to acquire insight into team dynamics and potential challenges.

How does your agency pass on institutional knowledge and expertise? How do you reward and celebrate the contributions of senior team members while creating space and opportunity for newer producers to thrive? Competition in the workplace can be healthy and effective, but it must be met with a strong sense of teamwork and solidarity, not cutthroat behavior. Every producer must feel that their individual actions matter, while also understanding that the agency succeeds or fails as a team. From producer mentorship programs to teambuilding exercises and beyond, building a healthy workplace improves everyone’s experience.

How to Build a Diverse Team and Diversity of Thought

How to Build a Diverse Team and Diversity of Thought 2560 1707 Andrew

Diversity is essential to a strong, creative, adaptable workplace, and it comes in many forms. Diversity includes socio-economic and ethnicity factors, gender diversity (including trans or non-binary individuals), queer people, varied nationalities and languages and academic backgrounds, neurodiversity, and more. Yet diversity exists not just in where we’ve come from, but in how we think.

How does your agency foster team diversity, including diversity of thought? Background diversity stems from recruitment and onboarding practices. How are you describing job openings? What positions are you creating? Do you have specific roles to support diversity within your HR department? Where do you advertise job openings? How and where do you conduct interviews and what criteria do you prioritize in resumes and CVs?

It’s often helpful to get an outside perspective on such matters, as it can prove difficult to identify internal challenges (diversity-oriented or otherwise). But supporting and celebrating diversity can strengthen and empower teams in any number of ways. More diverse workplaces encourage a broader and more open exchange of ideas. They help everyone learn to express themselves and feel comfortable with who they are. The less someone feels they have to hide in the workplace, the more likely you are to get the most out of them as a team member.

Fostering diversity of thought is partly about recruitment and onboarding practices, but it’s also about what you do once the team is in place. Is your leadership communicating creativity-oriented priorities? How are new ideas handled in your organization? What praise, experimentation, bonuses, promotions, or other tools do you use to reward and validate dynamic and inventive thought?

Diversity, in its many forms, helps an agency reach its full potential. Most agencies lack meaningful diversity and lack a plan to achieve or leverage it. What’s your plan?