Yesterday, I was having lunch with a longtime friend who’s also a client. He happens to be involved in private equity, and we got together specifically because he wants to help ITL take the next step. Inevitably, talk turned casually to my friend’s company becoming an investor. Shortly afterward, it became more serious, and we’ve scheduled a meeting later this week to discuss it more formally.
This kind of talk scares the crap out of me. On the one hand, I know investment is the only way I can make ITL achieve what I think it can achieve. On the other hand, do I want to give up control of the thing that I’ve spent a decade building? There has been plenty of blood, sweat and tears to get to this point. Am I ready to potentially give that all up if we don’t hit certain financial markers in the coming years?
There’s a major combine prep trainer in the business who probably asked himself the same question earlier this decade. When I say ‘major,’ I’m talking big, very big. In fact, this trainer was one of the pioneers of the business. I don’t know all the details of how it happened, but this trainer took in investors who wanted to make his service a franchise, the McDonald’s of combine prep. I’m sure they wanted to inhabit several markets, with combine prep the anchor and the multiple jerseys on the wall and various accolades from Hall of Famers as their draw. Well, ultimately, when things didn’t go the way the investors had planned, this trainer lost his brand and had to start over. There’s a happy ending for him — he’s launched another brand, and the contacts and body of work he’s built have helped him get right back on top — but there’s never any guarantee the story ends that way.
So the reason I discuss all of this is that probably once a week in the late spring and summer, I’m approached by agents who’ve had some success, but on a small scale. How do I partner up with a big firm, or get purchased by a corporation, they ask? I always ask them two things.
No. 1, if you were in an investor’s shoes, would you buy your agency? And No. 2, if things don’t go the way you hope, are you ready to walk away from the practice you bought, potentially even having to sign a non-compete that forces you out of the business?
These are the things I grapple with. There is no guaranteed happy ending. As you enter the business and start to take measured steps to the top, consider all sides and all outcomes. I can tell you that while I’m excited about the possibilities as I approach this week’s meeting, I’m also going to be praying plenty about where all this goes.
Wayne Haddix said:
I understand exactly where you are coming from. I get large Ameriprise firms trying to gobble up my smaller practice and other firms trying to get me to switch affiliations. I’ll refer to a couple of quotes I often hear & say to myself, “All money is not good money” and “It always looks better on the other side of the street until you get to the other side of the street”. I recommend you take your time, do lots of due diligence, and practicing that prayer thing is good too :). Best Wishes!!!