With their merger, both Willis and Towers Watson are playing offense, creating a synergy that strengthens both firms by combining the unique strengths of each the brokerage experience of Willis and the analytical, consultative services of Towers Watson.
Key here is that both firms are on the offensive with this marriage, both are coming from a position of strength. The key lesson here for smaller benefits firms is that they also need to provide the client with consultative and analytical services as well as brokerage services if they want to remain relevant, profitable and independent.
This mega-merger is happening in the midst of many other M&A deals involving smaller benefits firms. But here, almost all are a marriage of unequals, one acquiring in an offensive move, the other selling in a defensive move. Most owners who are selling are acting out of weakness. Their weakness usually is a lack of vision and sense of direction for the future of their firm, knowing that the old benefits agency business model is broken but with no idea of what a reform-proof business model looks like. Sometimes, however, the owner does know how he needs to change his business but lacks the willingness and drive (and, possibly, the financial resources) to make the needed changes.
I had a revealing if surprising conversation recently while doing some work for HUB. I was meeting with a regional producer team, each member of which had been given a copy of DO or DIE, my book on agency reinvention and growth. During a break, one of the HUB producers came up to me, book in hand, to tell me he had purchased my book when it first came out in 2012. When I asked if he found it useful, he replied that he agreed with all of the changes I prescribed for a firm's Portfolio, Marketing, Selling and Management; that's why he sold to HUB! I was taken aback, since the book was written for owners who want to remain independent. But in this case, the agency owner knew what to do, he just wasn't willing or able to change so he sold to a bigger firm.
There may or may not be other mergers of giants in our industry, but the M&A activity will continue -- and, I suspect, increase -- among smaller and mid-size firms as many owners decide to sell out and leave it to someone else to know and make the necessary changes to keep the business relevant and profitable. But while Willis and Towers Watson merged to become more competitive, the steps to remaining independent and thriving post-reform are readily available to any agency owner, as my agency clients can attest.
