To sell or not to sell? Between the acquisition season that is gripping the insurance industry, the growing understanding of the impact of COVID-19 on corporate results, and the growing concern that capital gains tax could rise in 2021, this is the question that is sure to be the question for many insurance brokers across the UK .
Deciding whether to sell a company or not is one of the toughest decisions a leader can make, and any outcome should be well informed and advised by as many neutral parties as possible. However, often a look at your LinkedIn feed can reveal that there is little neutrality when it comes to consolidation. The topic draws a passionate and compelling debate from two diametrically opposed schools of thought that herald consolidation as either the future or the demise of insurance brokerage, and there seem to be few bridges connecting the arguments.
From the point of view of someone without a horse in the race, three key aspects should be carefully considered before a sale sign appears. The first question needs to be at the center of all broker decisions – is this right for your clients?
To be the kind of brokerage with the customer base and regional reach that another company is looking to buy, it is certain that customer focus is built into your business model. And therein lies the question: What brought customers to you and will this be retained after a merger or acquisition?
The benefits of consolidation when it comes to offering customers an expanded range of products and services are undeniable, and the provision of a more seamless insurance experience through cross-selling opportunities is evident. Insurance brokers have to grapple with one question that only they know the answer to – how important it is to your client that their broker remains an independent voice in the community, and how will changing this matter affect the benefits of a partnership?
Simply put, if the answer to the question is less than a definitive « yes, » this should be the end of the conversation.
The second question that must form the basis of any acquisition discussion is: Is this the right thing for my employees? Employees are the lifeblood of every company. A brokerage business does not start and develop without them. So how could a successful acquisition take place without the wellbeing of the employees being the focus?
The COVID pandemic has made the role of employees in the development of a company clear. The adaptability brokers have shown during the crisis has made itself felt in many ways, including the swift move to remote working to the net promoter scores many insurance companies have posted over the past 10 months.
Every acquisition inevitably affects your employees, and only in the long term will it be completely clear whether these effects were positive or negative. As business leaders, the people who have helped build your business deserve your full consideration. So check everything carefully, from access to advanced systems and technology, to moving options, to the ability to receive training on new product lines.
On the other hand, anyone who has ever been part of an acquired company can tell you that the first transition is certainly a time of uncertainty. Here the need for flawless communication between the management team of a broker and its employees comes to the fore. Only through an open discussion of the needs and expectations of your employees can you safely answer “yes” to this second question and continue to consider all the potential paths your company could take.
From the above, it seems that the entire decision making process is related to the concept of utilitarianism. In fact, making a decision that will benefit the greatest number of people is a good start, but it’s not the end of the road. Is This the Right Step for You? Whether you are the broker’s founder, director or shareholder, this question cannot be ignored. Too often, the very real people and the very real financial and personal pressures they face are left by the wayside when the industry talks about the rights and wrongs of consolidation.
Asking whether selling your business is the right move not only requires you to evaluate the role your business is set to play in the brokerage community. It is also about asking whether now is the right time to sell and whether or not the right buyer has already come.
The financial services industry is no stranger to acquisitions that went wrong, resulting in either financial loss and / or litigation, as well as acquisitions that went very well – who could JP Morgan imagine today without the chase? However, if you are considering selling your business, you are likely familiar with the compelling arguments of both remaining independent and being part of a larger organization, and the final decision will always be fundamentally personal.
I contend that contrary to popular belief, consolidation cannot be presented as either a net positive or a net negative. As a concept, it’s just a constant, as inevitable and immutable as the tide. Consolidation only becomes a bad thing when people are forced onto the back of a market – when people have to answer « no » to any of the above questions and still have to decide to sell.
This is unnatural to the insurance brokerage ecosystem and will inevitably create problems across the board. Consolidation works best when it is perfectly balanced by a steady pipeline of new entrants ready and willing to consolidate the place of independent brokers in local communities.
What is a conflict of interest?
What is a conflict of interest? A conflict of interest occurs when a person’s personal interests in relation to family, friendships, financial or social factors can affect their judgment, decisions, or actions in the workplace. Government agencies take conflicts of interest so seriously that they are regulated.
What are conflicts of interest for companies?
A business conflict of interest usually refers to a situation where a person’s personal interests conflict with the professional interests of their employer or the company in which they are invested.
Are Conflicts of Interest Illegal?
The conflict can be alleviated – see below – but it still persists. In and of itself it is not illegal to have two roles, but the different roles certainly provide an incentive for improper actions under certain circumstances.) … A conflict of interest also exists if no unethical or improper actions result.
What are some examples of conflicts of interest in elderly care?
1 A real or factual conflict of interest occurs when there is a direct conflict between the public duty and the personal interests of an employee that inappropriately influences the employee in the performance of his or her duties.
What is a conflict of interest in therapy?
Conflicts of interest in psychology arise when a psychologist has interests or relationships that may affect his or her ability to perform professional roles.
What is an ethical conflict of interest?
The board defines conflict of interest as the contradiction between the private interests and the official or professional responsibilities of a person in a position of trust, power and / or authority. … It is sufficient if the situation offers the potential to impair professional judgment.
What are some examples of conflicts of interest?
Examples of conflicts of interest at work
- Hiring an unqualified relative to provide services your business needs.
- Starting a business that provides similar services to your full-time employer.
- Unless it is revealed that you are related to a candidate, the company will consider hiring.
What is a conflict of interest in insurance?
Some common situations where a conflict of interest arises that the insurance company may have to provide and pay for independent legal counsel are: … The lawsuit filed against the insured is seeking damages that exceed the insurance limits. In such a situation, the insured will usually want to settle at or within the insurance limits.