I Worry About Short Term-ism in Our Business
At BroadStreet℠, we partner with outstanding insurance agency entrepreneurs and build businesses together. Our role is to help our Core agency partners grow, and provide them with resources that they wouldn’t otherwise be able to access. Our goal is to build a stable, long-term business that creates continuity for our agency partners, their colleagues, and most importantly their clients.
As much as BroadStreet℠ focuses on building a long-term sustainable business, I worry a lot about short term-ism in our business.
For example, recently, the Private Equity ownership group of one of our peers—one that we respect a lot—decided to sell a majority of the company to another Private Equity group.
What surprises me is that the PE ownership group made this decision just three years after their initial investment…only 3 years! In other words, about the time it takes for a producer to really get their feet under them and validate.
This almost perfectly illustrates short-term view that PE investors have of our industry. (I have this disturbing image of groups of PE firms getting together and deciding to flip companies like we used to trade baseball cards.) It also exacerbates the pressure that some of our peers’ management teams are under to make short-term sacrifices to drive profitability—decisions that they might have to make at the expense of building a long-term business.
It’s different when you’re a BroadStreet℠ partner.
- We provide access to capital to help our core agency partners grow their business through tuck-in acquisitions, and we also encourage investment in new producers to generate organic growth.
- Our model is based on co-ownership and operational autonomy: when we invest in our partners, we invest alongside some of the best agency professionals in the business and we let them run their operations. As aligned owners, we make decisions about what’s best for the long term financial health of our Core partners.
- We also create liquidity for our management owners so that they can control the ownership succession of the business, and pass down the culture of ownership to the next generation of agency leaders.
If you’re looking for a partner and want to continue building upon your agency’s legacy of success, contact me to learn more about our co-ownership approach and how it aligns with building a long-term sustainable business.