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3 Ways to Smooth the Transition in an Acquisition

Whether you're just getting started in mergers & acquisitions  or have a few deals under your belt, here are a few areas to focus on to help this transition.
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3 ways to smooth the transition in an acquisition

So, you've finally closed the deal. You thought that was hard? Now the real work begins.

Independent agent and broker mergers & acquisitions (M&A) have slowed this year, returning to the levels seen before the pandemic. An increase in the cost of borrowing, as well as a pause in private-equity (PE) backed buyers, are among the reasons for the slowdown.

Now, two things are happening: smaller agencies are taking advantage of a less crowded field to step into the M&A market for the first time, while some of the most active buyers are focusing on consolidation to begin to make the most of their investment.

Whether you're just getting started in M&A or have a few deals under your belt, here are a few areas to focus on that can smooth the transition in the acquisition:

1) Processes. Bradley Flowers, founder of Portal Insurance in Mobile, Alabama, prides himself on his processes and employs an intranet where every question is searchable and mapped out in three forms: written, video and a flow chart. “It's sort of this ecosystem where literally every process, system, tool and technology live," he says.

“When integrating staff from an acquisition, it's invaluable to our agency," Flowers says. “We live and die by it."

2) People. Adding the upheaval of an acquisition to the already-full plate of a producer or customer service representative (CSR) is probably the last thing a diligent employee wants, which makes it “the toughest part," says Missy Kahl, partnerships director at Bickle Insurance in Athens, Ohio. “But it can also be the most rewarding. We've gained so many talented individuals through acquisitions."

After getting to know each individual, Bickle onboards acquired employees in the same way it would a regular employee. This ensures that job roles are aligned with skillsets and every employee has the support and training that they need to be successful.

3) Data. Kahl says that Bickle typically begins work on the data cleanup and transfer before the deal actually closes. However, the ease with which a buyer can ingest another agency's data depends on the “digital maturity" of the buyer and the seller, explains Dana Pasquali, vice president of product management at Vertafore.

“Acquiring a more digitally mature agency creates an expectation that the data is going to be subjected to string data governance," Pasquali says. Without it, areas that can become sticking points include inconsistent spellings of carrier names and missing NAIC codes. To correct it, “using the power of machine learning and artificial intelligence is a great opportunity to overcome these challenges," she says.

Will Jones is IA editor-in-chief. 

Tuesday, November 28, 2023
Agency Operations & Best Practices