“Don’t worry, everything will remain the same. Nothing will change, it will only get better. It’s business as usual!” says the soothing and familiar voice on the other end of the line. You’re thinking………...”Uh Huh, Yeah Right Buddy.”
You prepare for change because you know it’s coming and coming fast. Forced into survival mode you look for alternatives. You will need a Plan B. And a Plan C.
You know change is coming because you have been to this rodeo before. It probably won’t be good for you or your clients. That’s how it invariably works. Less flexibility, convoluted multi-layered decision making with a ‘Pass The Buck’ mentality where no one is accountable and differing priorities driven by profits over service.
See Gottwal’s article below:
Why Brokers and Advisors Struggle when the Vampires of Value Take Over
Private equity (PE) investment in organizations within the insurance, brokerage, and employee benefits sectors inevitably brings a wave of undesirable transformation for employees and the businesses they serve. Employees who have built careers around consultative service, relationship-building, and long-term customer support frequently find themselves navigating a dramatically altered landscape—one where profitability, scalability, and short-term revenue goals take precedence over the quality of service and client trust they once prioritized.
While some operational efficiencies and growth opportunities may arise, the negatives almost always outweigh the positives for employees who genuinely care about delivering value-driven service rather than simply maximizing profits.
How Private Equity Changes the Workplace in Insurance & Benefits Companies
1. Revenue Becomes the Dominant Metric
- Prior to PE involvement, many companies emphasized client relationships, service excellence, and customized solutions tailored to customer’s needs.
- After PE investment, success is increasingly measured by short-term sales quotas, revenue growth rates, and EBITDA (earnings before interest, taxes, depreciation, and amortization).
- Employees who took pride in educating their clients, customizing benefits solutions, and ensuring sustainable success feel pressured to prioritize fast deals over strategic fit.
2. Increased Sales Pressure & Aggressive Targets
- Higher sales quotas: PE owners expect faster revenue growth, setting unrealistic targets to justify their investment.
- Push for upsells and cross-sells: Employees should be ready to feel forced to prioritize revenue-generating services, even when they are not the best fit for a client.
- A transactional mindset replaces consultative selling: The emphasis on closing deals quickly erodes long-term relationships with clients and vendors.
3. Service & Support Take a Back Seat
- Fewer resources for customer support: PE firms reduce service staff, leaving clients with longer response times and lower-quality service.
- Less flexibility in client solutions: The company will often standardize offerings to maximize efficiency, eliminating customized solutions that clients value.
- Increased bureaucracy in problem resolution: Before PE involvement, customer issues could be resolved quickly by empowered employees; now, multiple levels of approval may be required, delaying resolutions and frustrating clients.
4. Cost-Cutting Measures Reduce Employee Morale
- Layoffs or hiring freezes: PE-backed companies often reduce costs by trimming non-essential roles, leaving remaining employees overworked and burned out.
- Commission reductions or altered compensation plans: Sales teams are likely to see commission structures shift, favoring short-term revenue over relationship-driven sales.
- Automation and self-service tools replace human support: PE firms often push for technology-driven efficiencies, which can weaken personal relationships with clients and industry partners.
5. Leadership & Cultural Shifts— Not for the Better
- Founder or mission-driven leadership killed off: The original leadership team, who built the company around service and relationships, will eventually be replaced by executives focused solely on financial performance. This will happen within a few months or years after the buyout terms of the sale are fulfilled.
- Decision-making becomes centralized: Local or frontline employees lose autonomy, with decisions made by corporate teams or PE firm-appointed executives.
- Workplace culture shifts to a high-pressure, results-driven environment: Employees who previously had pride in the company’s mission may now feel like they are working in a boiler-room sales operation. I met with one savvy industry veteran recently who shared that they now have to log every minute of every day in Salesforce. Bathroom break? Log it … was it in #1 or #2?
6. Job Instability & Future Uncertainty
- PE firms typically hold investments for 3–6 years, meaning: Employees don’t know when or to whom the company will be sold next. New ownership could bring even more disruptive changes. Employees with specialized expertise (like deep knowledge of self-funded benefits, prescription benefit contracts, or reference-based pricing) may be let go in favor of more generalist sales teams.
7. Ethical Concerns & Conflicts of Interest
- Pressure to push higher-margin products: Employees feel compelled to recommend services or insurance solutions that generate more profit, even if they aren’t the best fit for clients.
- Lack of transparency in pricing or cost structures: As PE owners seek higher profitability, there will be less openness about fees and expenses.
- Reputational erosion: When service quality declines or clients feel misled, employees may face ethical dilemmas in maintaining credibility with brokers and employers.
When PE comes, it is truly a matter of when, not if, you will want to leave. If you’ve not yet had to deal with this nightmare, let this brief message be a warning of what will be ahead when the vampires of value appear. And, while I’ve focused solely on how this works in the employee benefits space, know that it is how it works in every business. I just wanted to focus on benefits because it is what I know the best.
FROM A SAN ANTONIO BUSINESS OWNER
Everything in this report is absolutely true. It doesn’t matter the line of the business involved. I can speak about service businesses primarily, but Private Equity will ruin the quality of a company’s service offering. They can’t help themselves. Usually, they have no expertise around the nuances of what makes founder owned businesses successful, and even when told, they don’t think it’s important, and will cut the expense. It’s all about EBDITA. They get in and get out in 3-7 years, and to hell with the shape the business is in when they sell it.
