AGENCY OPERATIONS
DEVELOPING A UNIFIED CULTURE IN M & A
Excerpts from the Big I Virtual University M & A Handbook
According to the 2024 Agency Universe Study by the Big“ I,” one-third of agencies are planning an ownership transition in the next two years, underscoring an unprecedented period of mergers & acquisitions( M & A).
Potential buyers are increasingly targeting agencies that are renowned for their sales culture, impressive profit margins and proficient risk management strategies. However, despite meticulous financial due diligence, the post-acquisition phase often reveals unforeseen challenges.
One of the greatest challenges can be integrating staff and developing a unified culture. Here is an approach that can help pinpoint the initial concerns as well as lead to a strategy for unifying teams across the agency.
AGENCY CULTURAL EVALUATION
During the due diligence stage, it is vital to consider the culture of the acquisition target.
Organizational culture involves how all stakeholders— managers, employees, vendors and customers— experience the organization. Culture includes the organization’ s values, beliefs, attitudes and rules developed over time.
Culture is not the organization’ s mission statement; it is the way the organization conducts business and how managers interact with employees. Culture also includes cultural artifacts and symbols that represent the organization. From the carrier signs on the wall to the dress code to the building layout.
Corporate culture is the consistent and genuine behaviors demonstrated by all members of that organization, including its management team.
Understand that their culture is also their customer’ s culture. Changes made in the acquired org’ s service structure can negatively or positively impact existing clients. It will take employees time to adapt if this differs significantly from their current culture.
Ultimately, despite your best efforts, some employees will not adapt and may seek other employment or retire, either soon after the acquisition or within the first year or so after the merger. Around one-third of acquired employees leave the merged organization.
Therefore, to avoid customer’ s following suit, it’ s important in today’ s challenging labor market to retain as many employees as possible after a merger. Ask some of these questions to help determine the corporate layout and culture.
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