Acquisition

[CA Producer]

Hello All,

I recently found out that our agency owners sold to a private equity group and they are taking over asap. I’m hoping someone can give me some insight on the process, what’s happens to book, etc. any information is greatly appreciated.
Thank you

 

[Todd King]

Hello All,

I recently found out that our agency owners sold to a private equity group and they are taking over asap. I’m hoping someone can give me some insight on the process, what’s happens to book, etc. any information is greatly appreciated.
Thank you

Unless you are captive and have assigned your commissions, it shouldn't matter. Nothing should change with your book.

 

[Allen Trent]

Unless you are captive and have assigned your commissions, it shouldn't matter. Nothing should change with your book.

might be a PC agency where the person posting isnt a principal in the agency & doesnt have any ownership or right to the renewals.

In most of the private equity acquisitions I have seen in recent years in the multi-line, they merely bought the agency & kept on all the employees & locations. Never made sense to me how a private equity entity could buy agencies at top dollar & keep the expenses at same levels along with sometimes keeping the principals on the payroll. Not like those agencies have surplus to invest like when private equity buys a carrier.

For instance, Accrisure, as well as PCF have each closed almost 50 acquisitions so far YTD. Saw Accrisure just took over the naming rights of Pittsburg Steelers stadium from Heinz

 

[rousemark]

might be a PC agency where the person posting isnt a principal in the agency & doesnt have any ownership or right to the renewals.

In most of the private equity acquisitions I have seen in recent years in the multi-line, they merely bought the agency & kept on all the employees & locations. Never made sense to me how a private equity entity could buy agencies at top dollar & keep the expenses at same levels along with sometimes keeping the principals on the payroll. Not like those agencies have surplus to invest like when private equity buys a carrier.

For instance, Accrisure, as well as PCF have each closed almost 50 acquisitions so far YTD. Saw Accrisure just took over the naming rights of Pittsburg Steelers stadium from Heinz

The only thing I can figure out is they become so huge with the combined agencies that it gives them clout to negoiate higher contracts from the companies.

 

[Allen Trent]

The only thing I can figure out is they become so huge with the combined agencies that it gives them clout to negoiate higher contracts from the companies.

I don't believe so. Most carriers I have seen are not too happy about all the acquisitions, especially the PC carriers. It is supposedly reducing the footprint. But maybe life & annuity are more ok with the consolidations

 

[rousemark]

I don't believe so. Most carriers I have seen are not too happy about all the acquisitions, especially the PC carriers. It is supposedly reducing the footprint. But maybe life & annuity are more ok with the consolidations

I would expect them to be unhappy with just a few companies having that much bargaining power. I know life and health companies are not all that happy with Integrity but they won't say it out loud.

 

[Allen Trent]

I would expect them to be unhappy with just a few companies having that much bargaining power. I know life and health companies are not all that happy with Integrity but they won't say it out loud.

Plus, similar to Walmart making manufacturers change product sizes for Walmart shelf's, some of these huge entities are getting carriers to design products only for sale by them.

 

[rousemark]

Plus, similar to Walmart making manufacturers change product sizes for Walmart shelf's, some of these huge entities are getting carriers to design products only for sale by them.

And, can you imagine how concerned a small company would be about them pulling thier buiness ?

 

[AZDave]

Hello All,

I recently found out that our agency owners sold to a private equity group and they are taking over asap. I’m hoping someone can give me some insight on the process, what’s happens to book, etc. any information is greatly appreciated.
Thank you

I looked at selling my P&C agency last year and one of the most appealing option was to sell to a large private equity group. The payment to the agency would have been in full and quite fair. I and existing staff ( only one in my case ) would be hired on as full time W2 employees and paid same salary as my current draw. We would be expected to grow the book, and in the purchase agreement are 'earn out' bonus's that if reached would equate to another payout. This would be for two years. After two years, there is an option for the agent to continue on under a producer type of agreement, but basically the full sale is complete.

If your valuable to the Agency, you should be fine and may even see some type of growth incentive.

Lots of similar Mega Agency's like this out there. It is all about the premiums and growth, and the bonus contingencies these large Agency's can carve with the Carriers.

I wish you the best!

 

[CA Producer]

Allen, you’re absolutely right. I am not a principal and do not have ownership of my book. I appreciate all of the information everyone! I’ve been with the agent a long time and was hoping for partnership but obviously that ship has sailed. Now I’m just trying to figure out the changes to come and what to do moving forward. Thanks again.