A question posed at a recent event asked how many of the approximately 30 people in the room had ever been part of an acquisition or merger.
Almost every hand went up.
It seems just about every broker has been part of an acquisition or knows someone who went through it. It can be a scary time. There’s uncertainty, trepidation and plenty of stress.
Those feelings may be exacerbated when employees hear the brokerage they’ve spent years with is being acquired by the likes of BrokerLink and Hub International – two major players in the world of broker M&A. A big brokerage is taking over a small one: What will change? How will things change? Will we lose what makes us unique and has made us successful in our market?
Both companies cite the great importance of culture. For Paul Meyer, head of acquisitions at BrokerLink, the most important factor for them is the people.
“We know that the clients of the brokerage are attached very much to the frontline people. If the frontline people leave, the clients will leave,” he said. “And that’s bad for our brand. That’s bad for the financial elements of the transaction.”
It’s the brokerage’s culture that made them successful, so it only makes sense to ensure it’s maintained after an acquisition.
“In the due diligence process itself, that comes up. We talk about the DNA of the organization: Who are these people, what are they about, how they achieved the levels of growth and performance that they’re currently at,” said David Moon, president and CEO of HUB International Barton.
It all comes down to the clients. If the brokers are comfortable with the change — and both Meyer and Moon cited employee retention rates of well over 90% — the clients will be as well.
“We’ll run training and seminars explaining what [BrokerLink is] about but more importantly what our values are about — that we’re there for the clients. Service is very important,” Meyer said.
“You can’t grow an organization and be focused on organic growth if you’re not thinking first about how you’re looking after your clients,” Moon said, adding that HUB may look at ways to synergize back-office tasks like HR and finance but not interrupt the client-brokerage relationship.
For many brokers, their culture is their brand. Clients know them for the little and unique things they do.
“That identity comes from how they interact and hold themselves out to their client base,” Moon said. “There’s a great deal of room for that to happen because we believe so much in local autonomy.”
Meyer makes sure to be at the brokerage the day the acquisition announcement is made. There will be many questions and he wants to help answer them.
“I learned very early on that you have to empathize with people and you have to put yourself in their position,” he said. “I know it’s a very stressful day for them because the vendor has announced to them that there is a big change coming for them.”
Having that open level of communication is essential, Moon said.
“It should be two-way. It’s not about telling people stuff – it’s about listening, too,” he said. “Show people your door is open. Go out of your way to be there.”