The Myth of the Multiple with Legacy Advisors

Ryan Hanley: In a crude laboratory in the basement of his home. Hello everyone and welcome back to the show. Today we have an absolutely tremendous conversation for you. If you have ever thought about selling your business, specifically an insurance agency, then this is the conversation that you want to dial in for and listen to, because we have two of the absolute best in the business, Max Olson and Mike Almberg from Legacy Advisors. Legacy is a sell-side advisory firm that helps insurance agency owners sell their business for the maximum value to the right cultural partner. Both have experience in the industry. Both have acquired and or sold agencies. Both have operated in a private equity environment. They're young, they're hungry, and I'll tell you guys, these two and Legacy Advisors in general are starting to take over the sell-side market. Their advice is practical, it's based in real terms from real sales, and we get into it deep. We really hit it hard.

Ryan Hanley: If you've ever thought about selling your insurance agency, this is the episode for you. This is something you want to take in. You want to digest the concepts. We don't stay on the fluffy surface here. We really get down into it. Mike and Max are absolute pros. I really enjoy these guys. It was a pleasure to have them on the show.

Ryan Hanley: Before we get there, guys, I have a new newsletter. The newsletter is specific and unique to newsletter subscribers. You have to go to findingpeak.com. That's www.findingpeak.com. I'm no longer publishing some of the articles, thoughts, etc. online. It just doesn't make sense to do that. But you have to be a subscriber to the newsletter. The newsletter is going to have all kinds of great stuff, specifically focused on leadership, on life, on business, on finding peak performance, and all the pieces that go into becoming the best versions of ourselves. This is a journey that I've been on since 2017. At 42 years old, I'm in the best shape of my life. I run a company of 20 plus people. I've sold that business. I've done 350 keynotes in my life. I've had this long and winding career at still a relatively young age. I've done that through a series of disciplines, mindsets, activities, habits, etc. that allow me to stay focused even when things don't go my way, and I want to share those with you. To me, it brings great joy. It brings a great sense of pride, of satisfaction in my work to share these things with you guys and help you, because I know you're not alone. I struggle with these things every day. It's why I've had to set these practices, mindsets, disciplines up in my life. It's not that I wake up and I'm just dialed in. I wake up with all the same fears, anxieties, and insecurities that everyone else does. But then I have these things that I've built into my life which keep me on track, keep me going. Regardless of what setbacks happen, I continue to push forward and just never give up. It's this idea of never break promises to yourself.

Ryan Hanley: Guys, Finding Peak is a project that I have flailed around with a little bit in terms of dialing in exactly what I wanted it to be and how I wanted it to be delivered to you guys. The newsletter is going to be the way. To get that newsletter, you have to go to www.findingpeak.com. Enter your email. It's free. I promise you won't be disappointed. All right. I love you for listening to this podcast. Guys, let's get on to Mike and Max.

Ryan Hanley: Dudes, I'm so glad to have you on the show. It's been like a month or so in the making getting you scheduled and getting you on. But ever since we had our first conversation, I think it was two months ago over the summer, I've been excited to share what you guys are doing and your kind of unique approach with the audience. So I appreciate you coming on.

Mike Almberg: Thanks for having us, Ryan.

Max Olson: Yeah. It's been a lot of fun.

Ryan Hanley: So what is it like being one of the most sought after and fast growing sell side boutique brokerages in the insurance industry?

Mike Almberg: It's been a lot of fun. Thank you for the kind words. It's been great working with Max and the rest of the team. It's been rewarding. We can get into our backgrounds later, but this is definitely a change of pace for me. It's fun working with clients and seeing them happy.

Max Olson: Yeah, this is the most fun I've had basically my entire working career. That's what makes doing work special, when you can show up every day and feel very good about what you're doing. That's what it's all about.

Ryan Hanley: I think what I love about what you guys are doing is I've always been an enormous proponent of the independent insurance agency owner, of our system, of what it means. For so many of the men and women who put blood, sweat, and tears for 10, 20, 30, 40 plus years into these agencies, building them and growing them through ups and downs, the moment when they decide to sell is one of the most defining moments of their career. It sets up the remainder of their life. I was excited to have you on because it feels to me, and we were talking a little bit before — just so everyone knows, I had to cut Mike off because he was giving us all this awesome stuff and I was like, "Stop talking. We have to record." — it feels to me like there are a tremendous number of misconceptions. Mike, you even said it. You talk to your buddy down the street, and he kind of sucks at running his agency, yet he gets this multiple, and now I'm getting offered this one. I don't understand.

Ryan Hanley: Where I would love to start — we're going to bounce around a little bit — but I want to not bury the lead here. When someone is, before we get to how someone finds you and how you pick who to work with, what's the first huge misconception that you have to dispel? What's the most common misconception you have to level set on before we engage in this project together?

Max Olson: Sure. One of the big things for me — my background is in venture capital, so I was always used to the process of raise some money, build your business, and you sell it. That's a success. I think a lot of business owners, and your audience knows the demographic of insurance agent owners, agency owners, a lot of them hear that someone sold and they view it as waving the white flag. Like you failed or you couldn't do it anymore and you just needed it now. That's really not the case. There's a lot of reasons to sell your business. Our job and what we try to do the best that we can is to educate business owners and just know your options. Maybe you don't want to sell right now. Maybe you want to pass it to your kids or find a successor that already works at your agency that you love, that will do a great job taking care of clients. But you should know what the options are. I think a lot of people were just super close-minded prior to our conversations with them about even selling because they view it as a failure. It's not. It's definitely not. That's probably the biggest one for me.

Ryan Hanley: I really hope that's not the case, because I sold my agency at 40 after two years. If it's considered a failure to sell, then I'm in big trouble. I love that. So much of our business and so much of being an agency owner is about ego. I don't necessarily mean that in a bad way. To be driven, to fight through the challenges in our space, you have to have an ego. You have to take pride in what you do. There has to be an intrinsic level to the work. It does become like a child, or something incredibly meaningful. Maybe even it becomes your spouse. The idea of selling, maybe there's a little bit of machismo in it, a little bit of "I got the best number," but there's also a sense of "What do I do next?" I think it's a wonderful way of putting it that it doesn't mean your journey's over. It could be a stepping stone to the next big project that you want to do. A lot of it is you helping them maybe finance that next project by helping them get the best deal they can with what they've built.

Mike Almberg: Totally agree. The other piece to that too is it's not just finding the next project. It could be staying in the same thing, keep running your agency, but spending more time doing what you're good at and what you like doing. What we found, and this comes full circle to what we were just talking about. Max is a younger guy. He grew his agency really fast, and he sold it. A lot of people reached out and they were like, "Hey, man, why'd you do it? What are you doing?" Once some of these owners realized that if you partner with another firm, you don't have to do IT or payroll or accounting anymore, and you can focus on selling if that's what you're good at, or training and working with people, people get re-energized.

Ryan Hanley: There is an aspect to an age-old adage that I just don't think most people follow: working on your business versus in your business. When you're in it every day, it becomes overwhelming, it becomes stressful, it really becomes almost like a burden. When you finally get to a point — and this was a large part of me selling — I knew I'm not an in-the-business guy. I'm just not wired that way. There are certain skill sets which I would put myself against the best in the industry. And all the other skill sets, I'm in the bottom 10% on. For me, in large part, and there were other factors, I wanted to work on the thing, and this was the best way to do it.

Ryan Hanley: I would love to know, do you see this? It feels like maybe it's 45 and under, maybe it's 50 and under. But it does feel like my generation, your generation, there's more people willing to have that mentality of saying, "I don't need to own the whole thing. My name doesn't have to be on the box." I'm seeing more and more agencies with names like Rogue Risk, a name that isn't just the last name, versus the more traditional way which is "Hanley Insurance Services of Troy, New York." It feels like we're starting to shift as an industry. Are you seeing that?

Max Olson: I think so. If you look at consumers, they don't really care about someone's last name. It is one thing around 105 years and stuff like that. But realistically, if you started in the last 10 years and you're customer centric, which I think the best agencies are, there's a lot less focus on you as the owner, which is better for everybody.

Ryan Hanley: Is it true that — I was reading a leadership book the other day — actually, no, it wasn't. Are you guys familiar with Cody Sanchez? She's a lot leader. I love her for a bunch of reasons. Her whole philosophy is buying small businesses, buying boring businesses. She was talking about how one of her key checklist items is actually businesses in which the owner is replaceable. If the owner is a linchpin of the business, that's actually a negative. Do you see that with insurance agencies as well?

Max Olson: I think if the entire business is completely dependent on the owner, there's way more risk for a buyer. So if they've gone through and built up a solid team, created great culture, created processes, they're a lot more marketable than one that is a completely different purchase.

Mike Almberg: 100%. I think if the majority of the client list is there because the principal and the principal wants to step away, that's obvious risk to the buyer. The best case scenario is that principal sticks around and transitions that book and continues to grow their employees and make them better and stronger. The clients are happy, your employees are happy, and the business stays around. That's the win.

Ryan Hanley: I think something that — I don't know if you guys are familiar with the name Jason Kass, but he's been a friend of mine for a while. 10 years ago, 12 years ago, when we first started podcasting and sharing our thoughts on the industry, one of the very first things that I noticed about our industry that I thought was bananas is that people think of themselves as insurance agency owners and not business owners. That is a very unique mentality to our space. "I'm an agency owner." And you're like, "No, you own a business. It just happens to sell retail insurance as the product." When we would say that, we would get lambasted for that mentality. We'd be like, "You have to think like a business owner." Where this came from is we were looking at the Best Practices Report for the Big I. It was like 2.1% of budget is spent on marketing. We were like, a business owner looks at that and goes, "I need to grow. Maybe I need to increase that number." And these owners are like, "No, no, no. That money goes in my pocket. That's how I pay for my wife's seven series or whatever."

Ryan Hanley: It does feel like that shift is starting to happen. There are a lot of really good conversations around that. Do you approach those types of customers differently? Customers that come in that have a business owner mentality versus customers that come in with an agency owner mentality? Do you have to work them differently, talk through things differently with them?

Max Olson: Well, on the buyer side, if you're not growing and all you're going to do is use your agency as an ATM, you ultimately aren't going to get the same sales price as somebody that's focused on growth. They don't have to be spending 20% of their budget on marketing, but they should be spending some. Ultimately, you may save a little bit of money over the years, but when you get the time to sell, it doesn't help.

Mike Almberg: Ryan, I think it's completely different. We've had former clients that worked at a captive and got really good training and learned the sales skills and have a really good understanding of what to say and how to bang the phones. They saw the economics that they were giving up and they said, "Hey, I want to start an agency." They're really good at selling. But at the end of the day, they didn't really want to be business owners, or that's not where they want to spend their time. That's why they fell into a really, really good scenario. They built something cool. That's a completely different profile than the clients that we have that are really good at training and hiring and producing producers. There's different buyers for each one of those profiles too. I don't know if we treat them differently per se, but it's definitely a different conversation that we're having with them. It's sometimes a different buyer pool too that we've already been exploring.

Ryan Hanley: That's really interesting. Just changing slightly off that topic a little bit. I have a good buddy and he had a partner in — they owned one of the largest and fastest growing homeowners and personal lines agencies in Massachusetts, GNN Insurance. One of the things that they told me that I thought was genius, that I had never thought about — for those listening at home, it's Zach and Matt, Matt and Mollie — they told me, because I did a lot of interviewing with them when they were going through their sale, just because it was so interesting. One of the things that they had said that I thought was genius, that again I hadn't thought about this, was that they were told very early to start getting valuations done years before. Start thinking about the sale, not just "Okay, I'm ready to sell. Let's start thinking about this." But even before you're actually ready, start thinking, "Okay, if I ever needed to sell or if a great deal ever came in..."

[Ryan Hanley interjects with a mid-roll message]:

Ryan Hanley: What's up, guys? Sorry to take you away from the episode, but as you know, we do not run ads on this show. In exchange for that, I need your help. If you're loving this episode, if you enjoy this podcast, whether you're watching on YouTube or you're listening on your favorite podcast platform, I would love for you to subscribe, share, comment if you're on YouTube, leave a rating review if you're on Spotify or Apple iTunes. This helps the show grow. It helps me bring more guests in. We have a tremendous lineup of people coming in, men and women who've done incredible things, sharing their stories around peak performance, leadership, growth, sales, the things that are going to help you grow as a person and grow your business. They all check out comments, ratings, reviews. They check out all this information before they come on. So as I reach out to more and more people and want to bring them in and share their stories with you, I need your help. Share the show, subscribe if you're not subscribed, and I'd love for you to leave a comment about the show because I read all the comments. Or if you're on Apple or Spotify, leave a rating review of this show. I love you for listening to this show and I hope you enjoy listening as much as I do creating the show for you. All right, I'm out of here. Peace. Let's get back to the episode.

Ryan Hanley: Man, they started setting their business up to be sold before they were even ready to sell, if that makes sense. Talk me through that process, because other than them, I've really never heard anybody talk about it. To me, it seems like something that should just be a best practice, but I know it's not.

Max Olson: Starting with the end in mind is a really big deal. Even with my own agency prior to selling, I went through and did a valuation. It was probably two years before I sold. It wasn't the right time for me to go through a sale. But what I learned from that valuation, all the lessons in my business, I could go through the work on. I had two years to go through it and do it. Ultimately, because I did that valuation, because I went through that process, I was able to turn those things and sell it for a lot more money than it would have if I didn't.

Mike Almberg: Yeah, I think that's one scenario. The other one is a lot of people have a number in their head and they realize that they're already there. They do a valuation. So that's another kind of welcome surprise sometimes that we see.

Ryan Hanley: I remember one time I was talking to — I can't remember if I was talking to Zach or Matt about this specifically — but they said one of the things they realized in starting to do those annual valuations a few years before they were ready to sell is how much more valuation they could actually get by increasing their growth trajectory. That essentially gave them a target. Not just "let's grow," it was "okay, we have to get from X to Y, and at Y, man, now we're in a whole new multiple level and it opens up all these additional doors and additional buyers that maybe wouldn't have been interested with us at this target." To me, it feels like if you're five years out, maybe if you're 10 years out, potentially mentally start — how much can an annual valuation cost? It can't cost a thousand bucks, right? It can't be that much.

Max Olson: Yeah. So if you just bake that in and make that an annual process, you get a level set every year on where you're at and you can kind of feel the market out too, because the markets are constantly changing. It's not just realizing how much you grow and how much sale price would be impacted, but how you grow. What layers are you putting on expenses that maybe you couldn't change later on? Are you adding a lot of different offices that maybe you wouldn't want to have once you get through and then sell? It's just a bunch of factors that you become a lot more aware of and you can just grow a lot more efficiently.

Ryan Hanley: Going from being even an executive in companies to being the actual business owner, you learn very different the fixed versus variable expenses. The ones that you can just say, "I don't want this anymore. I'm going to get rid of it," versus you're screwed, you're locked in for a long time. Those things sound like a great idea until you realize — and that's why I'm kind of pushing this topic so hard. One of the things we talk about in my agency, one of the things I talk about at any speaking engagement or when I do sales trainings, is a big life thing for me is preparation. We don't want to have the thing happen and then start preparing. You prepare before the event. I'm trying to really hammer on this point because to me, if this is how you pay yourself off for decades of toil, let's just say that's the case. Let's say you're a 20-year-old agency. This is the moment where you get back so much of that blood, sweat, and tears. You don't want to get to that 20-year point, be burned out, be frustrated, just want to bail and pull the ripcord, because now you're in a position of weakness. If you can take a little bit of foresight, partner with maybe a company like Legacy, and do some prep work two, three, five years beforehand, now you're in the driver's seat.

Ryan Hanley: I love our industry. I've said this a million times. I came from a town of 900 people where people referred to my house as the crack house. We said you could leave your doors open in my town because the criminals lived there. They didn't steal from there. This industry has given me a life I could have never asked for. I think that's the case for a lot of agency owners. I'm so happy for this conversation because I want them to start to understand how to get their business ready for that moment, whether it's five years from now, 10 years from now, whatever. These conversations are so important because there's so much misunderstanding about this particular topic.

Mike Almberg: This is the best, most marketable time for their business. They get the highest price, and they're still going to have a high end on the back end as well. When it is time to go through a sale, they can go through a lot of both firms or not have to even move to a fine-fired hire. So the timing's huge.

Max Olson: And Ryan, just to add to that, that's done with a much smoother transition for your clients and your employees too. Obviously with your experience, a lot of your employees were left with great opportunities within that organization once you kind of stepped aside.

Ryan Hanley: Yeah, I had 30 employees when I sold. I feel great about that with the agency that I sold to. This is three years later. Several of them have received promotions. They probably wouldn't have gotten those opportunities otherwise.

Ryan Hanley: I think the level of commitment in particular that agency owners have for their people is another very unique aspect of our industry. I unfortunately just had to do a few layoffs at our agency and it was gut-wrenching. You feel like such a disappointment. You feel like you're failing. You're there to protect these people and they committed to you and helped you grow this thing. Then life happens and sometimes you have to make really hard decisions, which is what we had to do. I think our industry in particular has a strong commitment of ownership to people, even if they're not always treated exactly the way we would love. There is a level of commitment and caring and compassion that is particular. That's a really good point, Max. Doing this the right way helps set your people up for their career, not just your exit and whatever you want to do with your life. It also gives them a chance to maximize their career as well.

Mike Almberg: I don't think there's been a single agency owner that we have talked to that somewhere in the conversation hasn't asked, "What will happen to my staff?" They care about us. They should. The staff really who builds a business along with the agency owners, they should care.

Ryan Hanley: That's great. So okay, let's get to the fun stuff. Everyone has just dealt with 21 minutes of us talking through this stuff. How do you maximize the value of your agency? That's why everyone is listening. Whenever you money guys get on calls like this, everyone just wants, "What do I got to do?" You can answer wherever you want. I'm going to give you free reign and you can take this wherever you want. From what I've loved about just getting to know the two of you through the few calls that we've had off the air and knowing some similar people, is that you're very real, you're very honest, you're very straightforward, you have a very pragmatic approach to this process. I think it's why you guys are so successful, why you're one of the most referred sell side brokers in the business. Where would you start this conversation? How do agency owners start to frame this in their mind? Assume you have someone who's a few years out who believes that they need to start prepping, that they need to be prepared for this. They're doing things the right way. They come to you and they say, "Hey, I want to do everything the right way. I want to maximize this and I want to do it the right way." Where do you guys start? What do you start looking at? What do you have them start working on?

Mike Almberg: Sure. Just a disclaimer to your listeners. There's no magic tricks or anything like that that we can pull out. The buyers and the private equity firms that back these buyers, they're very sharp. There's no financial engineering where you're going to pull the wool over their eyes. We don't want to do that because obviously our reputation and our clients are going to be partners with them at the end of the day when they partner with them. You don't want to create any kind of optics up front. What's going to happen is those buyers, they're really smart. They're going to pay more for good businesses. Our job is to highlight what's exceptional about our clients and why they should be part of the organization at the end of the day.

Max Olson: I think a lot more. Do you want to add anything to the years before? You're like your agency owner. You want to go through the sales. I think first step is you want to build a great agency. That sounds simple and obvious, but a lot of people don't really focus on that. You want to establish processes. Better to do it earlier rather than later because they'll actually be implemented. You want to make sure that you have growth consistently above average. The larger the growth is, generally the higher your multiple. You want to make sure that you're operating lean, or at least you're giving yourself the ability to operate lean. You want to establish a solid culture. You want to be able to highlight your team and how great they are, how educated they are. If there are items that are between you and having that great agency that you don't have the initial skill set to go through and take care of, hire consultants. That will then help you.

Ryan Hanley: You just said a bunch of stuff in there. Let's start with processes. I have a very good buddy, Mick Hunt. He is awesome. Absolute one of the best. He's literally the GOAT of processes. Quick shout out to him just because he's the best. Guys, Patty, agencydevelopment.com. It is the LinkedIn for insurance professionals. If you're looking for process or at least a starting point for process, that's the place to go in my opinion. Game changer for Rogue really the last like three or four months. But why are processes so important? If I'm just crushing it and growth is good, but maybe I don't have everything documented or our processes aren't great, I'm just a rainmaker or whatever. If I'm growing, why should I care about having a process in the agency?

Mike Almberg: You are running your agency or to hire your profit, generally your growth will be higher as well. Oftentimes we'll have meetings with agents, new agencies, that have the same wage act revenue, maybe even in the same geography. But if you look at what their payroll expenses are, one can literally be double the other. That's usually not because their people are getting overpaid; it's because their people aren't as efficient as they grew.

Ryan Hanley: Right.

Mike Almberg: So if you establish a process in place, you can operate more lean, which allows you to have a higher sale price. Selling when you have those processes allows you to get all the items.

Ryan Hanley: I would say your listeners are a lot more growth-oriented and they're trying to learn. That's why they're listening to you in the first place. They leverage technology more than the average agency owner. There are some phenomenal solutions out there today that can really help you grow and be more efficient that don't cost that much money. So leverage tech as much as you can, but there's definitely a gray area where it's overkill. Be thoughtful about that.

Max Olson: I completely agree with that. One of the simple non-tech things that really helped us run more efficient is we run a version of the EOS system, the book *Traction*. We run a modified version specific to our agency. Simply putting that process in place, which literally runs off a Google sheet, just knowing what our goal is for the next week, the one thing we're going to get done, our rocks, et cetera, and everyone knowing what each person is working on—that simple process, which has nothing to do with technology, greatly improved the efficiency and project management of our agency. You read a book or hire a consultant for a couple weeks, and you now have something that will completely change the game for you. People just don't want to do these kinds of things. To me, it was a no-brainer because I hate working in the business so much. It helps me work on the business more, so I can just do more BD and stuff like that. No-brainer.

Ryan Hanley: I think for some individuals, for those of you listening who really love the nerdy shit that goes on in our space, it's harder for them because they almost don't want to extract themselves. They love being in there. I've actually seen a few agency owners, really forward-thinking and progressive ones, who've hired COOs to actually operate the business so that they can stay a little more boots on the ground because that's where they do their work. That's a really smart play. It takes a lot of humility. It could be perceived by those with a large ego as "I can't run my business," which is not what it's saying. It's "I understand where my most value is, so I'm handing off these other things."

Mike Almberg: I love that. Ryan, I think your old weekly organizer probably looked a lot like mine. We also ran off a modified EOS system, and I couldn't give that enough praise. It's huge.

Ryan Hanley: Yeah, it's funny. I always wondered why, if left to my own devices, I get pages and pages of to-dos. What that system does is it draws me back in because my ADHD will just be like, "Oh, I can do this, and I want to do this, and oh, okay, I'll do this." It forces me to say, "No, dummy. You have two tasks between now and next Tuesday. Get those two tasks done. Then you can follow all the rabbit holes you want." That's why we've got to have a system.

[Discussion continues]

Ryan Hanley: I want to come back to growth a little more, but first I want to talk about running a lean business. I think this is a really important concept to spend a little time on. When you talk about a lean business, what does that mean? And why is it impactful not only to the success of day-to-day operations, but ultimately to maximizing the potential value?

Mike Almberg: Let's start with the impact. Let's say you have a $2 million revenue agency and you're able to shave off $80,000 of expenses. That's not that big of an amount. The difference when you actually exit or sell, and that stays on, is going to be somewhere in the area of $600,000. Small efficiencies make a very big deal based on the small pools that exist in the insurance world. Operating lean means looking at your expenses, realizing what the return is on those expenses, and looking at all of them. Whether it's your tech stack and items you have but aren't using, leases where you realize you have two offices when you need one, or your people and realizing certain people could have a new role—it all factors in and can make any small change a large impact on the sales price.

Ryan Hanley: And again, I want to focus everyone away from the idea of trimming the fat before a sale. This is not cutting employees. We already talked about the demographics of insurance. All of these buyers in larger agencies need good people. They'll pay recruiting fees to hire good people. So if you already have good people, keep them. Our job is to show a picture of the business today, how it's operated on its own, and then how it would operate as part of a larger model. If you have to reallocate some people from account management or customer success into another division in that agency, a lot of times you can get credit for that on the pro forma. But you have to know how to ask. And again, they have to be good employees.

Max Olson: That is a part of employee management. I don't mean the actual managing of the employees, but taking stock in who your A, B, C, and D players are. Being able to properly identify who can be trained up, who needs to be trained up, who's performing at a high level, and who is never going to cut it. The number of times I've sat at a table with a glass of bourbon listening to someone complain about someone who's been with the company for 20 years and is terrible, but they won't let them go because of some reason. I go back to being an agency owner versus a business owner. I try to be loyal to your employees, but at a certain point, if you're not properly managing your people—giving them quarterly performance reviews, or we do trimesters, three times a year, with set criteria and feedback loops so people know where they're at—there is a reality that this individual is a drag to the business. They are a fixed expense. Is their attitude, effort, or efficiency impacting the business? A lot of owners get caught in, "Well, he or she has been here for X number of years, so I don't know how I could let them go. What would they do next?" There are actually a lot of options. You can hire services to help off-board people and find them other positions. You could call a few friends and say, "Hey, I have this individual. They're not a great fit for us. Here's what they're good at. Could they be a good fit?" There are ways of making sure your employees are taken care of, just not at your business. A lot of agency owners miss on that. You spend so much time focusing on the employee that isn't bringing the culture up instead of bringing it down. That makes it so you're not focusing on all the other people in your organization who are bringing the culture up and doing the right things. Ultimately, that impacts the retention of your best employees if you keep somebody on who doesn't improve the culture.

Ryan Hanley: I found myself the other day calling one of my team members who's a rock star. I said, "Hey man, I'm sorry I haven't checked in in a few days. I haven't checked in because you're doing good, right? I've been addressing the squeaky wheels." At the time, it just rolled off my tongue and felt very natural. He said, "Yeah, yeah, no, I get it." The truth is he's a self-starter. He solves problems. I don't have to worry about him. Then a couple of days later, I was thinking about that comment. I don't know why it hit me, but I thought, "Oh my God, I'm spending all my time and attention on the people that drive me nuts versus the people who are killers and rock stars. I could get even more out of them if I spent a little time and training. I can take them to another level. And I'm spending all my time with the people driving me crazy. What is wrong with me?" I won't say I took any positive action on that, but the thought kind of depressed me a little bit. Why am I spending my time on the people who are problems and not on the people who can probably do three times the work if I just give them direction?

Mike Almberg: Yeah, that's everyone's default.

Max Olson: Yeah, and not just with employees and management of people. It's the whole business.

Ryan Hanley: So let's spin back to growth. Everybody wants growth. What I've found in our industry is if you post something about growth, everyone will like it and comment on it. But I think most of it is lip service. Most agency owners love to talk about growth but don't actually want to do any of the things that will actually grow their agency. They just want to flip the lights on and wait for referrals to come in. When they don't grow, they bitch about it but will pound the table that they're a referral-based agency. It's this odd dynamic of lying to yourself and being lazy, but loving to talk about growth. When you were talking, you said growth is one of the key drivers to increasing multiples and valuation. You want to be above average growth and larger growth. Let's start breaking down this idea of growth because I think this is something that everybody focuses on. Let's lay this bag of snakes out.

Mike Almberg: On the growth side, a lot of buyers are doing purchases by strategic prices. For example, they may not have anybody in their organization who is a killer in commercial lines. They're rated commercial lines. They go at that backwards and forwards. You've got lots of different departments. No one is able to compound solid personal lines. If you have an organization that's growing at 30% every single year, you're going to be worth a lot more to them than a normal scenario because you can fix the problem on top of the revenue you're bringing. You're bringing a lot more value.

Ryan Hanley: In that scenario, does it make sense for agencies that have a niche focus that can align with a specific buyer need to do better, in air quotes, than a generalist agency?

Mike Almberg: There's always a premium for a niche, especially if the buyer thinks they can accelerate that growth. The generalist can do really well too. It's not one or the other. But yeah, you're usually going to get a break if there's an issue.

Ryan Hanley: That's great. If someone is sitting at home and they're a little nervous about reaching out, how do they know average growth versus what? How do they determine these numbers? Everyone says, "Where are the numbers in our industry where an agency owner can put their finger on it and go, 'My size, my region, I write 60-40 commercial lines in northwestern Ohio, and average growth is X'?" How do they know what's a good benchmark? Or is that what they pay you guys and valuation experts for?

Mike Almberg: It's a really hard question to answer right now, Ryan, given how much premiums are increasing year over year. We talk to a lot of agency owners who are bragging about 10% annual growth. When you peel it back, policy count is shrinking and it's all just due to premium increase. At the end of the day, insurance is an incredible product. Everyone needs it. Businesses need it. Individuals need it. There's going to be a home if you're looking to sell your book. And there's going to be a premium to that if you're looking to sell your business on top of the book. But it's really hard to answer what is strong growth right now. We've had clients north of 20%, 30%. Buyers seem to get really excited about those numbers. But if you're not growing to that extent, you still have an awesome business. Someone's going to want that. I wouldn't be deterred or down on yourself if you're not there. But you can certainly start to do better. It's good to work with professionals, whether it's somebody who can help you with valuation or other consultants in the industry. If you're hesitant to do that and just looking for something to check out online, Reagan Best Practice is always a good one to look at. It'll give you metrics for different size agencies. There's a lot of stuff that could be improved there, but it's a great starting point if you don't have a conversation with someone.

Ryan Hanley: So let's say somebody has been listening to this and they like you guys. Who is a good fit particularly for you? Someone is sitting there and they're going, "I would like to get out ahead of this. You've piqued my interest." Who's a good fit for you guys? And who maybe is not in your sweet spot, if that even exists?

Max Olson: We always lead with education up front. Generally speaking, if you're somebody who has an interest in selling—it may not be today, but in the next five years—we're happy to have a conversation. We're never selling. We're not trying to convince you that you can sell your insurance. Sometimes we have conversations with people where we tell them, "This isn't the time you should do it. You need to make these changes, and if you want to come back in a couple years, we'll be here to help you." So it's people who want to sell in the next five years. They want to get a general statement of where they're at. Sometimes they're surprised and it makes sense to make moves earlier than they expected. Sometimes it's not that case. It's really just up to them and their needs.

Ryan Hanley: How do they reach out? What's the best way to get a hold of you guys?

Max Olson: They can check out our website at legacyadvisors.partners. Or just send an email to Mike or myself. I'm [email protected]. Mike is [email protected]. We'd love to have conversations with them.

Ryan Hanley: Guys, I appreciate you taking this time with the audience. There's so much to our business and our industry. A lot of focus gets put on this moment. What I hope people take away is that there are many different paths. You've done a very good job of outlining that there is no right or wrong. There are different paths. The key is to start thinking about this as far in front of your decision as you can, so that you position your business in the best way possible. I really appreciate your time. I hope in the future you guys will be willing to come on again and talk more as the market continues to change. I think this would be a great regular segment for the show.

Mike Almberg: Definitely appreciate it. We'd love that, Ryan. Thanks for having us.

Ryan Hanley: Awesome, guys. All right, we're out of here. I love you.

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