The Importance of Post-M&A Integration in the Insurance Industry

In light of COVID-19’s effects on the economy, we’ve heard from both buyers and sellers who have had questions about the M&A climate in the private insurance sector. While the world’s economy may be suffering as a whole, the global insurance market is already rebounding. Just as we’ve weathered prior economic challenges and emerged stronger on the other side, Springtree Group will continue to fund prepared buyers and connect them with motivated sellers. Today, we’ll discuss strategies for successful integration in the insurance industry that will support your newly-acquired private agency despite the uncertainty that this pandemic has raised.

Integration: The Key to Successful M&A

Short-sighted buyers envision their private insurance acquisition ending when the agency has changed hands. In fact, successful integration, not physical ownership, is the hallmark of a merger that has gone well.

Despite this, integration is frequently overlooked. We have seen new owners quickly shift their focus onto making their subsequent acquisition, leaving their newly purchased agency essentially orphaned. Managers who are left to handle everything, including questions from staff and clients, may opt to leave the agency rather than face the onslaught alone.

You can position your agency for success by giving the details of integration your full attention for at least one month after a transition event. Use the following five tips to guide you through the process.

  1. Communicate with your new agency’s staff at each stage of integration.

When possible, we recommend retaining an insurance agency’s full-time staff. As you meet your new employees in person, it’s advisable to open lines of communication with them. Limit closed-door meetings and be as transparent as you can.

Through your communications with the staff, you’ll be able to convey your dedication to retaining the agency’s clients and acknowledge the team’s vital role in meeting your goal. When paired with your personal investment of time and willingness to learn how the agency already functions, your words will assuage any lingering doubts they may have.

  1. Take their concerns seriously.

Details like health care options, employee parking zones or permits, vacation hours, and scheduling can feel like minute details to new owners in the overall context of M&A. These concerns are of central importance to many employees, though, and dismissing issues like these is a mistake.

Instead, take the time to meet with your new staff to hold an open forum for their questions and concerns. If you are still working out some details, be forthright about it. It’s better to be honest about your uncertainty than to jump to a decision that may be ill-advised.

  1. Give your staff a script.

Now that you have opened lines of communication with your staff, be sure to equip them with a standardized script that they can use to answer inquiries from clients. Aim for all of your clients to receive the same information from every staff member. An agency in transition must reflect a calm, solid, and united front.

  1. Maintain the agency’s high standards.

You likely purchased this agency because you were impressed by its solid financial history and respected position within its community. Maintain the high standards that have carried the agency thus far.

By preserving good practices, you will earn the trust of both your employees and your clients. Over time, you may see things you want to improve. However, by first ensuring you have the support and loyalty of your team behind you, you will meet less resistance when you share your insight and plans for change.

  1. Train managers to handle the next wave of communication.

When you are ready to step back from the daily operations of your agency, pass the reigns of communication to your management. This shows your staff and clients that you are on the same page as management. Managers will be buoyed by your full confidence in their ability to lead.

If you’re ready to purchase an independent insurance agency, Springtree Group’s insurance-specific business brokers will match you with the perfect agency. Additionally, our in-house funding department will help you acquire the financing you require. Lack of funding is the number one cause of broken agency deals; choosing Springtree Group will vault you over this common hurdle.

Please note: while deals like these always take time, it’s possible that the current COVID-19 pandemic may cause additional delays. Although each stage may require more time to complete, STG is fully functional and ready to assist you with your M&A in 2020.