Buying and selling
Buying
On the acquisition side, it has been said that more than 40% of brokers' growth strategies include acquisition, with a clear majority citing acquisition within a 12-month timeframe. Economies of scale, geographic coverage and extending product ranges all feature as positive outcomes of the acquisition trail.
However, the downsides: time, cost and there being no law against making a bad deal, suggest the risk of failure is real. Initial factors to consider in mitigating this risk are: location, culture, strategic fit (including added-value), and financing the deal.
This is a people business; people buy and sell from people, so culture - an often discussed concept - is critical. You might end up buying a business that loses significant value if a key individual or team leaves.
Selling
For those considering selling, realising their value in the asset they have created over a period of time, perhaps retiring to enjoy a more relaxed lifestyle or moving on to other challenges, strategic choice should be paramount.
You know your business and your personal goals; they are as unique as you are. You know what makes both work. Any decision to change should be undertaken with a strategy in mind; after careful consideration of the options and their impact on you and the relationships with your clients, staff and suppliers.
Responding to an advertisement looking to attract a seller may fit your strategic objectives; however it may also narrow your options and place you at a disadvantage in negotiations. An exit strategy is not an option - nor is it desirable - it is essential...
Demeter Risk Solutions offers a unique, proactive service aimed at supporting the insurance broking community with the challenges of growth. The reasons for one brokerage seeking another – be it exploring partnership, M&A, network development or sale – are many and varied; every potential deal is different.
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