November 19, 2018
My Insurance Agency Was Purchased. Is My Job A Lost Cause?
by Kris Gibson
It’s no secret that the insurance brokerage world increasingly predatory. Agencies buy and sell one another all of time. In speaking with job seekers I’m often told “I want to go to a place that won’t sell”; to which my response is “get out of insurance”. Most laugh, but it’s true. M&A is a part of nearly every industry but it is here to stay in insurance. Rather than abandon your chosen profession mid-career, you can simply learn to navigate those waters a bit better. To do that, it helps to understand some truths about it.
Let’s play some True or False!
If my company is acquired I need to be worried about my job security.
This can be both true and false and really is situationally dependent. There are two companies in any M&A deal; the buyer and the seller. Looking at the buyer’s history following past acquisitions can be a good indicator of future behavior. Have they laid off, grown, maintained, changed business models, etc. In general, it is better to be a legacy employee of the buyer than the seller though as the acquired can often be the first cut if cuts are made at all.
Getting bought by a bigger company opens way more doors to me in my career.
False. There is a prevailing belief that a bigger company offers more opportunity to grow. This is simply not true. A company’s size does not correlate to professional growth. Having more chairs to fill doesn’t make the chairs better or really even increase your chance of landing in one. An organization’s approach to developing, bettering, and advancing their employees always trumps size alone. Not to say big companies can’t be great, but it isn’t a direct correlation to their size.
It is better to get bought by a private equity firm than a competing agency.
Well, this is a hard…..maybe. PE firms are investors. They buy something today to sell it for more tomorrow, or the next day, or, well, you get it. The point is they want to buy and sell while making money in the process. To be fair, some just like the revenue they can earn owning an agency but that is not too common. What’s the best way to make something worth more, at least in business terms? Maintain or grow revenue while simultaneously cutting costs. Insurance agencies, on the other hand, are in the insurance business. It doesn’t mean they won’t make sweeping changes or cuts, but they are often buying to grow their business and not just lean it up and flip it.