Skip to content

Avoid Shiny Revenue Syndrome, The M&A Strategy of Leading Agencies


What is the mergers and acquisitions strategy of leading agencies?

Next time you see a PR release of an agency acquisition I’d like for you to look for a few things:

  1. How do they announce or position who they acquired?
  2. How do they describe the agency being acquired?
  3. How do they describe the people or teams in that agency?
  4. How many times do they use “value” words such as Together, Complimentary, Leading, Expansion, Expertise, etc.

And while it happens in some cases, oftentimes the financial terms of the deal are not shared because it isn’t the most important insight. When leading agencies are looking to purchase for growth, they are also strategic buyers of opportunity to leverage or create value. The revenue is a key factor, but their purchased growth strategy is deliberate in accomplishing other organizational goals.

Some examples (from my own experience in deals I was involved):


Value gain

Our agency acquired a benefits practice in a state where we didn’t have a footprint.

Geography and LOB expansion. Several producers already had key clients in the state, and this brought significant cross-selling gains over the next two years.

An agency that specialized and was recognized nationally by leading flood carriers as an expert.

The agency offered but did not have expertise in flood. This team provided a lot of education to other producers on how to optimize flood policies for existing and new clients.

A team of producers who had a majority market share for a line of business we didn’t offer.

With only a few agencies in the region having appointments writing the business was challenging. Bringing producers with those appointments gave our agency the market share and opened new prospecting channels for other producers.


For many growing agencies who have never purchased a book of business before there can be tunnel vision on finding a deal versus finding the right deal. Good opportunities in this segment of the market can be challenging to find. Organic growth is hard, and who wouldn’t jump at the opportunity to potentially double their agency in a short period of time?

Of course, there is more than one strategy for M&A, so this isn’t saying that buying cash flow at a discount isn’t a good move. But as you are considering your purchased growth strategy you should thoughtfully consider why you want to acquire to make it easier to identify who you want to acquire. Knowing your own agency is the first step, then building an ideal acquisition profile will make the process easier to evaluate opportunities when they appear.

What type of buyer do you want to be?

Knowing your ideal acquisition and creating a plan before the deal presents itself will help you act quickly. The first letter of intent and offer may not always be the one accepted, but being positioned to make an offer and deliver on the terms dramatically increases your chances.

Some agencies are well-positioned to negotiate with retiring owners who have small to medium sized generalist books of business and facilitate a smooth transition. Others are intentional about finding a medium-to-larger size agency with certain synergies or value opportunities and can create a plan to implement those.

What do you envision your agency to be?

If your goal is to be a generalist agency with $X annual revenue that’s great. But if your goal is to be niched down and seen as a leading agency for a specific market, then your organic and purchased growth goals should be designed with the goal in mind.

There is a need to balance concentration for growth with diversification to reduce exposure, so that doesn’t mean you should double down and only buy hyper-defined book of business profiles. However, setting a roadmap for what you want your agency to look like in 1, 3, 5, or 10 years will also give the framework on what steps can be taken to reach that goal.

Also think of the inverse of this scenario. Knowing who you would like to be acquired by for your exit planning will help you make decisions to become that ideal candidate. Simply amassing revenue is not the only factor that strategic buyers consider when finding agencies to acquire. Being able to envision and implement your entire journey as an agency owner from the starting point, growth mode, and eventual exit will pay serious dividends versus just building a book and sitting on it until you are ready to retire.

What actions can you take as you plan a growth by acquisition strategy?

  1. Make sure your agency has a well-defined mission, vision, value, and culture to know who you are and who you want to be. One of the biggest risks of buying an agency or book of business is a clash in culture or values between former owners, employees, and clients.
  2. Utilize your AMS and data tools at your disposal to understand your book of business and what you want it to look like. We can do a book of business analysis and strategy session with you to facilitate this conversation and steps for growth.
  3. Create an ideal acquisition profile that includes information that would make or break a deal. We can also help you create this profile to understand your agency, a potential candidate, and what the future of your agency can look like:
    1. What is the client profile?
    2. What is their carrier mix?
    3. What technology is in place?
    4. What synergies exist or can be created?


Interested in building a strategy for growth by acquisition? Let’s chat.

Click here to schedule a time to learn about our services and how we can help.