Springfield Business Journal_2020-11-16

WE MEET YOU WHERE YOU ARE. SERVICES WE PROVIDE: FINANCIAL PLANNING 401(K) LIFE, DISABILITY, LONG-TERM CARE, CRITICAL ILLNESS AND MEDICAL SUPPLEMENTS Zoom MUTUALOFOMAHA.COM 417-863-7250 SPRINGFIELD BUSINESS JOURNAL · 17 NOV. 16-22, 2020 INSURANCE & BENEFITS businesses that are well r an, quality and there is a strong management team in place, you don’t change things. Or else, why are you buying it anyway? “We did not go out trying to find the highest bidder. We did this from a strate- gic and quality standpoint.” One of the industry’s fastest-growing insurance brokers is Michigan-based Acri- sure. According to Optis, it’s grown from roughly $650 million of revenue in 2017 to $2 billion today and has penned more than 500 acqui- sitions in recent years with a focus on small and midsize markets. Pending completion of the deal next year, a merger be- tween Willis Towers Watson PLC and Aon PLC will create the largest broker, at $20 bil- lion in revenue, according to Atlanta-based Reagan Con- sulting. The second largest is Marsh, at $17 billion in rev- enue, followed by Gallagher at $5.7 billion. “Consolidation is an accelerator toward a world where the benefits of scale will provide a compelling competitive advan- tage,” said Reagan Consulting President Kevin Stripe, in an email release. “Inde- pendent brokers need to adapt quickly or face irrelevance.” Connell Insurance Inc. President and CEO Jeff Seifried said the brokerage ex- plored several offers from large agencies earlier this year. He joined Connell in July after leading the Branson/Lakes Area Chamber of Commerce & Convention Center. “I think we had about five different of- ferings and at the end of the day, the de- cision was made to at this moment, hire a CEO and manage the growth that we’re seeing,” he said. “It’s good business prac- tice to understand what is out there to get a better under- standing of the valuation of your business.” Seifried said with his hiring, co-owners Tim Connell and Randall Gammill stepped back from day-to-day operations. Connell’s brother, Pat, founded the firm 50 years ago. But he said a future sale is always on the table. “There are good insurance companies and there are great insurance companies and the difference of that is seen by the consum- er and that’s what makes the free market great,” he said. Education focus Ollis said for many agencies, sales to large insurance aggregators tend to hap- pen because owners have failed to plan for the next generation of ownership. “In many cases, they are paying a pre- mium for these agencies,” he said. “That’s attractive. “Frankly, many agencies have done a poor job of planning for perpetuation, so when the principals or the owners get to an age where they’re ready to either semiretire or retire, because they didn’t do a good job of bringing young people to their company, the only option is to sell out.” Ollis said his strategy to maintain a growing independent agency includes re- cruiting and training the next generation and focusing on cul- ture. “If we recruit and develop talent, we’ll write more new busi- ness than if we just focus on writing new business,” he said. “Over half of all agencies are not hiring enough advisers to meet future growth objectives and fewer than that have de- fined training/mentoring programs.” That long-term planning can be seen in Ollis’ local mergers in the past five years. In 2015, the firm joined with Branson’s Akers & Arney Agency, and in 2018, Bo- livar’s The Paul Long Agency joined Ol- lis/Akers/Arney. The company also has opted to be employee owned, establishing an ESOP in 2008. “There are so many business owners who would prefer to perpetuate their company to a young person or young peo- ple in their community, but the problem is, they don’t start early enough hiring and grooming those people to take over the company,” Ollis said. That’s part of the work he wants to do on the MAIA board. “It’s essentially providing education and resources around perpetuation plan- ning for people, for capital, for education, for financial literacy – so folks understand how to financially run a company and man- age a company,” he said. Seifried and Smith agree this is often the driving factor for a sale. “As the insurance industry shifts and you’ve got a lot of smaller independent agencies that don’t have an exit strat- egy in terms of the ownership, it leads to a natural exit strategy,” Seifried said. “There’s nothing wrong with that.” Ollis contends an independent agency better serves its community, and is more involved in nonprofit giving and civic leadership. “Locally owned companies that have a stake in their community serve clients more effectively,” he said. M&A: Fastest-growing broker is Michigan-based Acrisure at $2B in revenue Continued from page 11 Jeff Seifried : Connell Insurance considered five purchase deals earlier this year. $20B Combined revenue of Willis Towers Watson and Aon, pending merger