TSD Consolidation

CF: M&A is taking different shapes in the TSD market. As some partners characterize it, sometimes one TSD makes the purchase just to bring more partners in. And that can become cannibalization and share-shifting. How to TSDs go from competing over the same group of agents to building a machine that can help agents bring in new end user customers?

CW: I’ve been around a long time. You can see the gray hairs. I’ve seen a lot of consolidation and mergers and acquisitions, and they’re all all kinds of things. The reality is that you can’t ever look at two mergers and try and compare and contrast what happened. The dynamics of the organizations that are coming together are always different. The inflection point of where it makes sense is always different. Some are buying just for scale’s sake. “I’m going go buy revenue and be the biggest,” and that’s great. Others are doing it strategically to augment areas of their business where they can go acquire something that will take years to build or a high level of investment. I think people tend to just look at a high level and say, “Oh, it’s a race to scoop up as much as you can.” But that’s not a strategic motion. The strategic motion is how you augment what it is you have. You’ll hear a lot of the feedback on these is, “Oh, it’s very complimentary; it’s good,” or “It’s the same; it’s good.”

The reality is, you need both. You’re not going to go make an investment that’s strategic and accretive to your business if there’s not something new it’s bringing to the table. On the flip side, you’ve also got to have the synergy so that the cultural fit is there as well. If you don’t have both of those, that’s when you get into, “What does an integration actually look like, and how long does it take?”

Let’s take a look at the PlanetOne acquisition. We competed against Avant; we went after the market in different ways. So there was a complementary nature to the business models that fit. And then you had two high-powered, rowdy fun cultures that jived immediately. So you hit both of those when you made that move. If you don’t get both, take a look at what what you’re actually getting for that acquisition. If it doesn’t add value in a new way and also doesn’t fit from a cultural perspective, it’s a challenging integration. Man, it’s been fun. It’s been a good run the last two months.