These are busy times at the Marsh & McLennan Agency. Last month, MMA announced that it had acquired Strategic Benefit Solutions, a $4 million benefits brokerage and consulting firm based in Alpharetta, Ga., and RJF Agencies, one of the largest independent agencies in the upper Midwest. Those steps followed closely on the heels of MMA's acquisition of Pennsylvania-based Trion Group in December 2010.
With the acquisitions of RJF and SBS, the two-year-old MMA has acquired a total of eight agencies since November 2009 - evidence of the aggressive growth strategy in place at the firm, which is a subsidiary of global broker Marsh Inc.
With about $285 million in revenue, it's poised to crack the top-10 list of the largest insurance agencies in the country. Their goal: to be in the top five, reaching $1 billion in revenue.
EBA caught up with David Eslick, MMA's chairman and CEO, to find out more about their plan to become a major player in the benefits market.
What portion of MMA's overall revenue does your benefits business represent?
Right now, about 40% of our revenue is in employee benefits, and 60% is in property and casualty.
Is that employee benefits/P&C ratio where you want it to be in the long run?
Where we are now would be about the balance we're looking to have long term.
A key part of our strategy is from a cross-selling standpoint - being able to make sure that with our P&C clients we're properly explaining to them our employee benefits capability and looking for them to become both P&C and benefit clients.
And the same is true with our benefit clients - explaining to them our P&C capability and looking to have them become a client on both sides.
To do that you need to have a fair balance of revenue, because that says that you have a balance of professional capabilities on both sides.
Your focus is primarily on the middle market, correct?
Yes, it is. With that said, though, while that's our primary focus, we also have larger accounts that some people would not define as middle market, as well as small business accounts. We're looking to become a significant player in all markets across the country.
How large is your corporate staff at this time?
We now have approximately 1,500 colleagues in the company, and our corporate staff consists of 11 people. We're built around a hub-and-spoke structure. That means the vast majority, if not all, of the decisionmaking on how we compete in our markets in each one of our regions - who are the competitors, what are the necessary capabilities in order to win - is really driven by our leadership team and our people in the field.
What's MMA's relationship to other Marsh business units, particularly Mercer?
We always look to see where we can be beneficial to the other companies within Marsh and McLennan. We're talking with Mercer and looking at how we can work together with them to bring value to both sides.
We're very early on in our development in this area, so those conversations are working their way through. But you know, Mercer has phenomenal capabilities, resources and intellectual capital.
We're looking at how we can utilize those strengths so we don't have to build them up ourselves.
And we have situations where we have accounts, or clients, or opportunities involving needs above and beyond our capabilities and much more in the Mercer environment. In those situations we would look to partner with Mercer.
Does health care reform play a part in your growth strategy?
I think there's no question that it continues to get more difficult for companies to make sure they understand the provisions of the law, what they have to do, and how can we help them with that.
In our view, helping walk them through all that continues to make us very important to our clients. It also says that the ability to do that - to access what that all means, to put that information together and properly communicate it - is going to be more effective and efficient if you are an organization of a certain size.
What is it like for you to manage such an aggressive growth strategy?
You know, I relate the acquisition process to when I was a producer and looking to develop my client base. You always have to be talking with a lot of people who might join in with you in the future.
When you're doing acquisitions, there's no definitive date when somebody absolutely has to make a decision. So we're talking with a lot of people, making sure they understand what our strategy is and how it works, and doing a lot of work to understand their businesses.
It just happens at certain points in time where both sides get to the point where they say, "Now's the time. We want to do something."
Sometimes they come in clumps and sometimes they just roll nicely, one after another. But you can never really predict the timing.
It has been very busy over the last few months. But that's great, because we were able to get into business with the exact people we wanted to be in business with.
What qualities do you look for in an acquisition?
The No. 1 factor that we're looking for is the talent of the leadership. We're building this from the ground up, so we need to find great, quality organizations. Every time I've found a great organization, I've found a great leader.
Our key leadership - around driving our strategy to win in the marketplace, around attracting clients and keeping them, and around expanding the services we provide those clients - will be driven primarily on a regional basis. So we have to have great leadership, especially from our hubs, which are the organizations that will take the lead in each of our regions.
Also, we have to have all of the capabilities that support the organization, from finance to HR and IT.
And we're looking for organizations that have built a great base and have a great reputation in their marketplace, both in the community and the business environment, but also very importantly with the insurance carrier partners that they do business with - and that also have a good, strong production team. Those are the key factors.
Are you finding that there's a greater interest these days - particularly among founders of agencies, perhaps approaching retirement age - in selling their businesses?
What I've found throughout my career is that there are always a number of different factors that motivate somebody who owns a privately held business to consider questions about whether to keep it privately held or partner with somebody.
We're not looking for people who are are saying, "OK, I'm at the end of my career and now I want to do something else."
We're looking for people who say, "Listen, I've got another 15 or 20 years to my career; I've built a great business, but I'd like to be part of building something even more significant" - with greater capabilities and greater resources, and therefore greater opportunities for them, their colleagues and their clients. That's what we're looking for.
With that said, the economic downturn and soft market conditions have put pressure on some brokers - can they perform well enough on their own or should they look for opportunities to partner with other companies?
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