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Scott Tannas founded the Canadian insurance company Western Financial Group in 1993. As CEO, he built it into a diversified financial services firm through more than 100 acquisitions of small- and midsized insurance companies. It now has more than $1.5 billion in annual sales, with more than 1,800 employees. Tannas, who left the company in 2014, now runs a private equity firm, Western Investment Company of Canada Limited. He is also a member of the Senate of Canada.
Recently, Tannas spoke with Scaleups.com about the acquisitions strategies that propelled the company’s growth. Here are some takeaways.
Target similar organizations
Tannas his team focused on finding targets with a similar culture that typically had $2 million to $10 million in annual sales, five to 20 employees, and strong organic growth. “We bought companies that looked like ours, and towns looked like the one we live in,” he says. They prioritized those in growing communities.
They kept track of the acquisitions in a book of targets. When the team identified potential acquisitions, Tannas would show up at their place of business, without bringing up questions about whether the owners were ready to sell, and invite them out for coffee. Sometimes, these meetings took place long before they were ready to exit. Getting to know the owners early made it easier to work together when they reached the stage where they wanted to move on. “In 75% of the transactions, we did it without a sales process that involved anyone else,” says Tannas.
Know your “Why?”
Rather than look for fixer-uppers, Tannas and his team sought acquisitions that would allow the company to expand its network and customer base. That, in turn, propelled growth.
“So many companies delude themselves that they will be able to wring out efficiencies that never come to pass or they just don’t have a plan,” says Tannas. “Never delude yourself into thinking you are going to wring out cost savings. There is no more efficient operation than a small business.”
Show you care
Tannas and his team put sellers at ease by using a small-town business lawyer —“not a shark”–for the transactions, he says. “We did things to show we cared about everyone.”
That stood the company in good stead as its acquisitions strategy picked up momentum. “We could ask any single one of the sellers if they would be a reference for the next transaction,” says Tannas.
Western Financial used the Rockefeller Habits, described in my book Mastering the Rockefeller Habits, to align its team. Once the company made an acquisition, it would ask the manager of that location to do a One-Page Strategic Plan. That focus on strategy helped the company grow from one location to 150. “It worked really well for us,” says Tannas.
Now, that same outlook is continuing to guide the acquisitions strategy Tannas uses at Western Investment Company of Canada–helping him to find targets that are well poised for growth in customers and sales.