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Look Before You Leap On Agency Mergers And Acquisitions

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Look Before You Leap On Agency Mergers And Acquisitions

Surprisingly, some independent insurance agencies and brokerage firms do not do their homework prior to entering a merger or acquisition, and not surprisingly, the honeymoon is often over before it has begun.

Possibly enthralled by the thought of new beginnings, some agencies allow emotions to replace due diligence, which is akin to rearranging deck chairs aboard the Titanic. When such an important decision is treated in such a cavalier fashion, choppy water ahead is virtually guaranteed.

Succinctly, much like many modern marriages (because, in a business sense, that is exactly what they are) mergers and acquisitions demand pre-nuptial agreements that should be thoroughly thought through and agreed upon before ink is placed on any contractual agreement. This usually involves a considerable amount of give-and-take on the part of both parties involved.

There are specific areas that especially demand extensive scrutiny throughout the negotiating process, with every “i” dotted and every “t” crossed, then checked again, before sailing forth to new horizons. Such precautionary measures are absolutely necessary for any organization to protect itself from present and future misery prior to steering in new directions.

The areas include:

Transformation and reorganization.

Virtually all acquisitions and mergers mean some, if not considerable, redesign of jobs to make them more productive, service-related and satisfying. This also usually means the jobs become more challenging, complex and customer-centric. Therefore, the emphasis needs to be placed on training, employee development, and continuous workplace learning during and not after negotiations.

Whoever becomes the major partner will undoubtedly have one way of doing things, and the other involved party another way. But what has worked for one won’t necessarily work for the other, at least not in all operational areas.

It follows that strong consideration must be given to what demands to be changed, and what should remain the same. The purpose is to focus on the customers needs to be served by more productive, and usually happier, employees. This in turn will lead to top-notch service.

Customer service will improve because most employees are equal to most challenges. And they will meet and often surpass them as long as they are told why there is a need for change, are trained and compensated fairly, and kept constantly posted on what is, or soon might be, transpiring within the agency.


Management means different things to different people and organizations, and therein is the hitch. Specifically, if the interested parties cannot come to a consensus on a management philosophy and related practices, it is probably time to end negotiations. There is no sense in attempting to create a lifelong relationship if the involved parties agree to disagree with one or the other, or both, and neither is willing to compromise.

Conversely, and going on the presumption that there is needed flexibility at the negotiating table, those involved in the proposed alliance must target, as part of the desired management structure, such important areas as:

1) What needs changing and why it does.

2) Deciding who will be responsible for needed changes within an agreed upon timeframe.

3) The economic outlay, required personnel, possible help from outside sources and necessary tools to implement the needed changes.

Sometimes such basic requirements are not given the devoted concentration that should be paramount during discussions. Rather, they are tabled for further study and whatever actions deemed necessary after the ink is dry on the contractual agreement. That is a bad start and it could lead to disaster.


The development of a new endeavor affords a unique opportunity to test timeworn habits of both parties involved in an acquisition or merger. In the process, especially within the technological environment, this will often lead combined entities operating under one banner to build new and better bridges to superior client service.

This means, of course, that the involved parties must not only have compatible computers, but be on the same page as to what, exactly, is needed to furnish excellent service and how to go about constantly achieving this mandatory ongoing objective. It also means the new organization, and its combined employees, must be able to thoroughly understand any new or updated technological operations which are usually, if not always, part of a new endeavor.

Again, training will probably be needed, and decisions must be made on how it will be handled. For example, can it be rendered in-house, or would it be preferable to go to an outside management consultant or a computer training organization, or both? What is a certainty, whatever route is taken, is that all workstations must be focussed directly on the customer.

Related is the mixing of employees with technology. This is an especially important consideration within a newly combined organization where many employees will be meeting new co-workers. Technology can often mean the redesigning of jobs for many, if not all, concerned. The purpose of technology is to facilitate speed of operation and ease of doing business.


An acquisition, merger or joint marketing venture brings the challenge and responsibility of redefining marketing opportunities. What products of the combined entities should be kept and which, if any, should be dropped? What should be added, and are there new marketing niches that should be explored?

Such newly-combined organizations also often need a new logo, new letterheads, announcements to clients and prospects, the print and electronic media (both consumer and trade), and, possibly, a press conference. Also usually needed will be new sales materials, direct response campaigns and motivation of the in-house sales personnel, and, if applicable, the field sales force.

Other challenges that must be addressed during negotiations include the distribution systems and what can be done, above-and-beyond what has been mentioned, to make the new alliance as client-driven as possible.

Establishing a new image.

Will the combined organization have a new name? If so, this would naturally call for not only an attractive logo that should clearly denote the new image, but an advertising and publicity campaign to spread the word within the market area.

Even if a new title is not part of the new and combined picture, the reasons for the change, which certainly include the ability to better service clients and improve delivery of products and services offered, calls for an advertising and publicity campaign. And the campaigns must see periodic follow-ups.

Summing up, there is absolutely no doubt that acquisitions and mergers, or a co-op-marketing venture, can be an exciting time for the involved parties considering such a move. There is the promise of brighter tomorrows, often creating additional enthusiasm with the promise of new cash flow that should enable the agency to achieve long desired objectives.

This has, indeed, been realized by some agencies, while it has fallen short of the goal for others. Often, this is because not nearly enough proper attention was given to some crucially important areas during acquisition or merger discussions. Simply put, look closely, and do the required homework, before you leap.

John A. Uzzi is president of Roy W. Walters & Associates, a nationwide management consulting organization serving the insurance/financial services industry, headquartered in Paramus, N.J. His e-mail is [email protected]

Reproduced from National Underwriter Life & Health/Financial Services Edition, April 8, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.