We sometimes hear that owners prefer to perpetuate internally as intuitively there would be less disruption to operations and therefore important relationships (e.g., employees, distribution partners, carriers, vendors, etc.) would not change. Further, this means of ownership transfer is generally thought to have a lesser chance of adversely impacting culture. While an important topic to owners, they generally fail to make internal perpetuation a priority. Coupling this reality with the historically high valuations and other challenges, the vast majority of owners ultimately sell externally. Join George Bucur as he explores internal perpetuation and the high-level factors you should consider when determining ownership perpetuation options.
To The Point: A MarshBerry Video Series
Is an Internal Perpetuation Plan Part of Your Strategy? Part 1
June 22, 2023
George Bucur, MarshBerry Managing Director and Specialty Practice Co-Lead explores internal perpetuation and the high-level factors you should consider when determining ownership perpetuation options.
Video Transcription
Hello, I’m George Bucur, managing director and co-head of MarshBerry’s specialty practice. Serving MGAs (managing general agent), MGUs (managing general underwriter), wholesale brokers, and program managers, we’re here today to present this first part of a two-part series that explores the topic of internal perpetuation.
Starting my career over a decade ago with MarshBerry, it seemed a bit of an enigma to me in regards to how many organizations wanted to perpetuate their stock internally but ultimately ended up selling. And there’s many reasons and factors for that, but it took me a period of time to better understand why that actually happens.
At MarshBerry, we take a very relationship-based focus when developing prospects, relationships, and working with our clients. This means getting to know their goals, their resource needs, and their challenges to help create bespoke solutions that will help them.
As you can imagine, internal perpetuation is a regular topic of conversation that comes up. In going through and exploring these relationships and better understanding the goals of our clients, it became very clear that while perpetuation internally is an important topic for a lot of the firms that are out in the marketplace today, it does not become an urgent topic. And the difference being is that without that sense of urgency, the time, the resources, and the overall duration to implement an internal perpetuation plan gets put on the back burner and frankly doesn’t get done.
It’s because of that, we’ve seen so many transactions really growing over the last 10 years and somewhat flatlining in 2022, still with a lot of robust activity happening in 2023. But I highlight the external transactions because that’s the only other recourse, as everybody must sell. If you can’t sell your stock internally, the external markets are frankly a very lucrative and enticing alternative.
For this session, we’re going through and talking about internal perpetuation, but in our next section, we are going to focus on the pros, the cons, and the challenges of how firms have been able to successfully perpetuate and what they need to be aware of as they move down that path.
Thank you for your time today, and until next time, be well.
MarshBerry is a global leader in investment banking and consulting services, specializing in the insurance brokerage and wealth management sectors. If your firm seeks expert advisory guidance to refine your business strategies, drive sustainable growth, or facilitate a sale, MarshBerry is the ideal partner to support you in making these critical business decisions. Collaborating with a trusted advisor who deeply understands your business and the industry can help you maximize value at every stage of ownership.
