Inside the BroadStreet $2.8 Billion Co-Ownership Model with Michael O’Connor

Michael [0:00:00]: For a lot of people, we're not a good fit.

Michael [0:00:01]: We're not the right answer for them when they think about how they wanna take their firm forward and what they wanna do.

Michael [0:00:05]: But for those that do wanna perpetuate the firm do have an next generation leaders are trying to actually continue to grow both organically and wanna do more inorganic.

Michael [0:00:15]: We start to get to be a very interesting option.

Callan [0:00:20]: Welcome to The Insurance Growth Lab.

Callan [0:00:22]: Where we go deep on the growth campaigns and strategies driving real results in the insurance into street.

Callan [0:00:28]: I`m Callan Harrington founder Flashgrowth and in each episode, I sit down with marketing and growth leaders from carriers and shirt tech and top brokers to break down one specific initiative, whether it's how March at it a product, scale a channel, or solve a specific growth challenge.

Callan [0:00:46]: It's no fluff, just tactical insights you can apply in your own company.

Callan [0:00:50]: So Mike, love things I'm excited to talk about today.

Callan [0:00:58]: I think Broad Street got one of the most interesting models that's in the market period.

Callan [0:01:02]: But where I start this off is you were a two time all American at Not dame.

Callan [0:01:07]: Tell me the story when your wife first saw those photos.

Michael [0:01:11]: Yeah.

Michael [0:01:11]: So I ran at not dame, and my wife and I met working in Chicago.

Michael [0:01:15]: She got a graduate degree at the university of Michigan.

Michael [0:01:17]: And we met it work and went down a Michigan not dame game, and we were run around the Athletic department.

Michael [0:01:23]: We stopped by and she wanted to see where they post all the all Americans.

Michael [0:01:27]: Unfortunately, I think for me, I thought that would be a great moment in our relationship, which she got most excited about was that I was...

Michael [0:01:33]: And she was very intrigued and the fact that I was teammates with Tim Brown and Rock.

Michael [0:01:37]: Both very well known football players who actually also love track, and I had a good fortune when I was in school that basically call them teammates each of them.

Michael [0:01:45]: So it was a very humble beginning or a relationship today, but we're happily married thirty years and still a house divided once a year when Michigan plays not dame.

Callan [0:01:54]: I love it it's like, you you make all American twice.

Callan [0:01:56]: It's not enough.

Michael [0:01:59]: It's track.

Michael [0:01:59]: It's not football.

Michael [0:02:00]: So...

Callan [0:02:01]: Yes.

Callan [0:02:01]: That is a a very humble way of saying you still ran track at Not dame.

Callan [0:02:05]: And we're all American twice.

Callan [0:02:06]: So house divided So actually as I'm thinking about this.

Callan [0:02:09]: It must have actually been a legit deal within the family when Michigan stopped playing not dame.

Callan [0:02:15]: Yep.

Michael [0:02:16]: A sad day.

Michael [0:02:16]: I mean I think two great institutions, great academic institutions, very passionate, alumni and subway alumni.

Michael [0:02:24]: You know, it's one of the great things about college football you're bring two great institutions together and they build the history together.

Callan [0:02:29]: Yeah.

Michael [0:02:30]: So, hopefully, they'll, you know, get back to playing together again, just because I think it's one of these great, you know, college rival.

Callan [0:02:35]: It's like big ten keeps adding other schools and I gateway why Not dame doesn't join.

Callan [0:02:39]: Like, I'm not naive for that reason, but, I mean, as an ohio state fan, we want Not dame in the big ten so bad.

Callan [0:02:46]: Alright.

Callan [0:02:46]: Where we're I here talk about that?

Callan [0:02:48]: So Y know, I wanna hit a couple of kind of stats on your career in Broad street just in general.

Callan [0:02:53]: You were, c president at Ao.

Callan [0:02:55]: Broad Street is the sixteenth largest broker in the world.

Callan [0:02:58]: So not just North America, sixteenth largest in the world, and you're doing two point eight billion in revenue.

Callan [0:03:04]: But the most interesting thing to me about broad stream is most of the people hearing this, even if they're in the space are probably like, what?

Callan [0:03:13]: Oh who I'll give you a story.

Callan [0:03:16]: One of my favorite stories, and I think we talked about this a little bit, but our managing partner, Jason Walker, he's now the president at Agency revolution.

Callan [0:03:23]: Broad street partners was on the fourth floor of the Smith Brothers building, and we were on the fifth at the company we're at a time.

Callan [0:03:29]: And Jason's meeting with Rick Miley, the founder and Chairman at Broad and afterwards he comes up, and he goes and I lead sales.

Callan [0:03:37]: So like, this is gonna say a lot more about me.

Callan [0:03:39]: And he says, hey, those guys because we, like kinda knew the guy...

Callan [0:03:43]: Like, you know, seeing each other in the hall and in the line downstairs, getting food and stuff.

Callan [0:03:47]: It goes, you know those guys are, like, they're pretty big.

Callan [0:03:50]: I said, I've never heard him.

Callan [0:03:53]: If I've never heard them, there's no way they're big.

Callan [0:03:55]: Horrible statement at this point.

Callan [0:03:56]: And he goes, no.

Callan [0:03:57]: They're, like, one of the biggest in the country.

Callan [0:03:59]: And I was like, okay.

Callan [0:04:00]: Let's go and insurance journal they're five four number four number five.

Callan [0:04:04]: And so, you know, it's crazy even then, and that was ten years ago, still very much the case now.

Callan [0:04:11]: And what I wanna do today because I think it's one of the most interesting models.

Callan [0:04:15]: It's one of the best stories to tell in my opinion.

Callan [0:04:17]: And also I wanna kinda take the other side of the bench and kinda talk about it in some of those counter points to it, but can you help us break us down, what is the structure of broad.

Callan [0:04:27]: What's broad?

Callan [0:04:28]: What's a core partner?

Callan [0:04:29]: What are the tuck ins?

Callan [0:04:30]: How does Broad free play?

Callan [0:04:31]: Could you just give us a a high level breakdown of that structure?

Michael [0:04:35]: Sure.

Michael [0:04:35]: So first, you mentioned Rick Miley, and I think he's founder the firm and a the genius behind it.

Michael [0:04:40]: And I think the way the firm was built was Rick's vision of saying, hey, I wanna find successful, highly motivated, entrepreneurial, independent brokers, and not only an individual, but a team.

Michael [0:04:52]: Who are looking to continue to grow, but might benefit from a financial sponsor as well as someone who can help them with other tools sort of in the toolbox to continue to grow.

Michael [0:05:03]: And Rick went out and said, hey, if I'm gonna look someone like that.

Michael [0:05:06]: I want them to have skin in the game, they're gonna wanna have skin in the game.

Michael [0:05:09]: You know, they're one not gonna continue to wanna be an equity owner.

Michael [0:05:12]: Mh.

Michael [0:05:13]: So the whole motto was built on the whole...

Michael [0:05:15]: Concept they're saying, hey, for certain independent agencies out there, finding someone who would take an ownership stake, a majority stake, but leave them with a lot of equity in their firm, where they still had the ability to basically grow it, drive it, continue to invest in it would be a really unique way to align with a set of leaders.

Michael [0:05:35]: And that's how we operate the firm.

Michael [0:05:38]: You know, we call each of these platform businesses, a core partner.

Michael [0:05:42]: And we're really investing in them.

Michael [0:05:44]: We're investing in that leadership team and their vision of where they wanna take the firm You know, we're relying on them to continue to run and operate it.

Michael [0:05:52]: We're relying on them to continue to recruit the next generation leaders and help develop those folks.

Michael [0:05:56]: And our alignment of interest is that the equity that they retain in their firm is the same equity we own.

Michael [0:06:02]: And therefore, their success is our success.

Michael [0:06:06]: And the Broad street model grew out of this very unique ownership model, and it's all about our partners.

Michael [0:06:12]: It's not about Broad Street.

Michael [0:06:13]: So one of the things that you highlighted, you know, is we don't go out and actually advertise our name and talk about us because it's all about our partners.

Michael [0:06:20]: We are our partners to continue to manage the firm, operate the firm, keep their brand, continue to focus on what they do.

Michael [0:06:27]: And what we really try to help them do is, you know, support growth That's both organic growth, inorganic growth, helping them drive productivity and best practices in their business and ultimately build succession.

Michael [0:06:39]: Build a stronger and deeper each to their firms as well as the next generation of owners.

Michael [0:06:43]: And our hope is that they'll be able to continue to rep perpetuate the firm for, you know, decades and decades to come.

Michael [0:06:50]: And Rick had this concept twenty years ago, and it's, you know, thriving today.

Michael [0:06:54]: And we haven't changed that core element of the model of ownership since the day it was started.

Callan [0:07:00]: So with this in as, I understand it, you've got the so core partner, you've got thirty of these twenty nine Us one in Canada, that's still the correct direct number.

Callan [0:07:08]: Okay.

Callan [0:07:08]: So let's talk about the twenty nine in the North America.

Callan [0:07:10]: And these are very large organizations in their own.

Callan [0:07:14]: Right?

Callan [0:07:15]: And so what's the typical?

Callan [0:07:17]: Is it the same split that you're taking every time with a core partner?

Michael [0:07:21]: No.

Michael [0:07:21]: Our ownership stake is really dictated by the partner.

Michael [0:07:24]: Mh.

Michael [0:07:24]: We're there to provide liquidity the people want liquidity and we wanna take a majority ownership state, but we'll customize it based on the partner needs.

Michael [0:07:34]: Mh.

Michael [0:07:34]: At that particular point in time.

Michael [0:07:36]: So we're a majority owner in all the firms, but the percentage just vary.

Callan [0:07:40]: Okay.

Callan [0:07:40]: And the one as I understand, you know Rick, when you first kinda...

Callan [0:07:44]: Well, pretty much the entire time is he never wanted to be a hundred percent of one of these core partners.

Callan [0:07:48]: Is that correct?

Michael [0:07:49]: Correct?

Callan [0:07:50]: Okay.

Callan [0:07:50]: So you've got the core partners.

Callan [0:07:52]: And then these core partners.

Callan [0:07:53]: And I think one of the most interesting things about Broad street is these core partners are doing a lot of acquisitions in their own right.

Callan [0:08:00]: When I a lot of acquisitions.

Callan [0:08:01]: Broad as a whole as more acquisitions than anybody.

Callan [0:08:04]: I mean, they usually lead the list almost every year and share number of acquisitions.

Callan [0:08:07]: So you guys have built an absolute playbook and a machine to be able to do this.

Callan [0:08:11]: And not even just at the very large agencies it could be small agencies that are tucking into these core partners?

Michael [0:08:17]: Sure.

Callan [0:08:17]: Alright.

Callan [0:08:17]: So the core partners, let's talk a little bit about local equity?

Callan [0:08:21]: What does local equity mean?

Michael [0:08:24]: Some same equity we hold.

Michael [0:08:25]: So we, again, buying a majority of the firm, just pick numbers out of the there.

Michael [0:08:29]: If we buy sixty percent of the firm, we own sixty percent of the equity and the partners is locally owned forty percent.

Michael [0:08:36]: Mh.

Callan [0:08:36]: And so locally could mean anything.

Callan [0:08:39]: Who did?

Michael [0:08:40]: On average our partners, roughly think about it is there's about a thousand shareholders through thirty firm.

Michael [0:08:45]: So just over thirty owners per firm.

Michael [0:08:47]: Mh.

Michael [0:08:48]: So it's usually the senior folks in the organization that it owned the equity And the way we think about that is look, it varies a little bit by partners, shape and size, but the whole concept from the beginning when Rick started this is, look, we want local shareholders who are the leaders in that firm, both this generation next generation, the people are gonna shape the future of the firm.

Michael [0:09:09]: Mh.

Michael [0:09:09]: And our partners choose and select who they think are the right shareholders for them, but it's largely their senior team.

Michael [0:09:16]: It's all the large producers and the organization But it's up to them, and we're just a sounding board, but they make the decisions on who are the right people to actually own equity in the firm.

Michael [0:09:26]: And again, if you look at it, it's roughly, you know, thirty or so Yeah.

Michael [0:09:30]: Equity owners per partner.

Callan [0:09:31]: So that local equity is going to be the minority majority stake.

Callan [0:09:34]: You guys have the majority stake works the same as yours.

Callan [0:09:37]: So one of the things that I found interesting was and you talked about this a little bit is from a punctuation perspective.

Callan [0:09:45]: And you're actively trying.

Callan [0:09:48]: I think one of the things that's was interesting and all those core partners as I understand it, I mean, it it makes sense because otherwise, this model wouldn't work.

Callan [0:09:54]: You're looking for entrepreneurial owners that want to be there for the long terms.

Callan [0:09:59]: That correct correct?

Callan [0:09:59]: When do they typically come to you?

Callan [0:10:01]: Because I can make the other point on this and say if I'm entrepreneurial.

Callan [0:10:04]: I don't want Broad Street.

Callan [0:10:05]: Now I do understand if I get to a certain size and scale?

Callan [0:10:09]: I need resources, access to capital is gonna be pretty significant.

Callan [0:10:12]: I may not wanna take a personal guarantee with any of that.

Callan [0:10:15]: So can you just walk me through, like, what are those trigger events that say, okay.

Callan [0:10:20]: I wanna start looking for a different partner on

Michael [0:10:22]: business.

Michael [0:10:22]: I mean, I think there's a thousand reasons why people do that.

Michael [0:10:25]: But I think, you know, you step back and you go, who's gonna be most attracted to a model like this.

Michael [0:10:30]: You know, again, the Broad street team itself, people who carry Broad street business cards a very limited number of people.

Michael [0:10:35]: Mh.

Michael [0:10:35]: So we really are betting on the local leadership team, and we're looking for not only this generation, but the next generation.

Michael [0:10:42]: So we're almost looking for people who...

Michael [0:10:43]: As you described it are highly motivated highly successful businesses.

Michael [0:10:47]: They may be looking to take some chips off the table or they've got some principles that wanna liquidate, but they're also looking for tools to grow.

Michael [0:10:55]: Mh.

Michael [0:10:55]: And when you think about the things we can do, listen we've got, you know, fifteen billion dollars of premium that we're putting in the market, so our partners are able to work together and collaborate if they think it makes sense in terms of serving clients or working with carriers, you know, we have the ability as you described it to give them resources do M and A.

Michael [0:11:12]: You know, often these firms, if you look at our partners in the Us.

Michael [0:11:15]: I think Dow Hale said in their estimate.

Michael [0:11:18]: Now, over twenty one of our partners making the top one hundred.

Michael [0:11:21]: Mh.

Michael [0:11:21]: So these are large firms.

Michael [0:11:22]: They may have before they joined us, done a couple acquisitions.

Michael [0:11:26]: But as you described it, there's a lot of risk involved when you're trying to do this without a partner.

Michael [0:11:31]: Sure.

Michael [0:11:31]: When they come to us, you know, we have a credit facility that we access the, you know, debt markets to put together, we provide our partners capital to do M and A.

Michael [0:11:41]: We have five M and A attorneys on staff, so we'll pay for every deal.

Michael [0:11:45]: We have, you know, employment attorneys on staff.

Michael [0:11:47]: We basically tell to our partners listen focus on developing relationships of acquisitions you would like to do, and we'll be your middle and back office.

Michael [0:11:55]: We'll do diligence on your behalf with you, we'll have a lawyer work with you, we'll have our finance team work with you.

Michael [0:12:02]: So it becomes a way for the partners not only to have access to capital, but all other resources needed to do M and A.

Michael [0:12:08]: And where our partners are really able to focus is, you know, who could be a great addition to my firm, how do I bring content and capability who are leaders that are gonna fit very well with my organization and where there to help them actually, you know, have a robust M and A agenda.

Michael [0:12:22]: And as you described it, we'll look to add one or two platforms a year depending on the year to depending in situation, but we wanna make sure all of our partners have the ability to do M and A and do tuck in acquisitions if they want.

Michael [0:12:34]: There's no requirement.

Michael [0:12:35]: There's no expectation.

Michael [0:12:37]: But not surprisingly almost all of our partners who join, basically say I wanna make that a tool in the toolbox, and they start actually think about what kind of, you know, pipeline of M and A might make sense for them.

Callan [0:12:49]: I think you just said that this, but I could be I wanna double how many partner agencies do you add core partner agencies do you

Michael [0:12:54]: had per year?

Michael [0:12:54]: One or two.

Michael [0:12:55]: One or two.

Callan [0:12:56]: And I have to assume, I mean, it looked like the original strategy was to do this geographically.

Callan [0:13:00]: But thirty in the Us that's got it probably be tough to continue to do that from a pure geographical perspective.

Callan [0:13:06]: Are you now looking at, you know, different verticals, whether that's a niche or are you looking at wholesaler Mg things?

Callan [0:13:13]: Yes.

Callan [0:13:14]: Yes.

Callan [0:13:14]: I I think look, the firm

Michael [0:13:16]: grew up originally, you know, what I'd call is very strong regional brokerage firm.

Michael [0:13:20]: They've all gotten a lot bigger.

Michael [0:13:22]: They've all developed specialty capabilities.

Michael [0:13:24]: They've all started to be super regional.

Michael [0:13:26]: And I think as we added firms to the family, it starts with...

Michael [0:13:31]: You know, are they in a situation where they think and outside party can help them, You know, again, access to capital access to growth.

Michael [0:13:38]: And then for us is, you know, do they have the attributes they're gonna fit well on our model, Highly motivated team, commitment to a next generation leaders, they really wanna drive growth for their own firm?

Michael [0:13:48]: You know, and we're open to specialty businesses for sure wholesale businesses.

Michael [0:13:53]: Again, if you just think about, you know, all we do is insurance.

Michael [0:13:56]: Every day.

Michael [0:13:57]: So we're very comfortable looking at all kinds of different businesses and spending time with leadership teams, to figure out whether we're a good fit, and, you know, myself and other members of the team and some of our partners.

Michael [0:14:08]: When they talk to folks, it's all about spending time, getting to know one another and figuring out whether broad street models an attractive one for them.

Michael [0:14:16]: Because we own these business forever.

Michael [0:14:18]: Our hope is that we'll continue to perpetuate these businesses for decades and decades and decades.

Michael [0:14:22]: So, you know, we wanna make sure that it's a great fit that they know exactly all the different elements of the Broad street model, but that's what they're most excited about because there's other places they can go.

Michael [0:14:32]: There's plenty of acquire in the industry as we all know.

Michael [0:14:35]: You know, and there's all different flavors out there, so we wanna make sure people understand the Broad stream model and they can, you know, make a decision whether it's a good fit or not.

Callan [0:14:45]: What's that evaluation process look like for you guys that may be a little bit unique in that?

Callan [0:14:49]: Because like you said, and I hear that on paper?

Callan [0:14:52]: Like, we're looking for highly motivated on entrepreneurs.

Callan [0:14:53]: I would argue most would.

Callan [0:14:55]: How are you evaluating that?

Callan [0:14:56]: And how do you actually think about and whether it's evaluating or because you might have an amazing entrepreneur, but there's no line of succession in that, but I'm assuming you guys have seen this playbook many times.

Callan [0:15:07]: How are you helping them with those?

Callan [0:15:09]: Because I've heard you wanna always increase that shareholder base.

Callan [0:15:12]: And it makes sense.

Callan [0:15:12]: It's gonna der risk broad stream in a major way that shareholder base is pretty significant because they're gonna have incentive to grow this.

Callan [0:15:19]: But what does that look like?

Michael [0:15:21]: Yeah.

Michael [0:15:21]: I mean, I think one clarification.

Michael [0:15:22]: Just given the model, we're not focused on, you know, distributing the ownership base or anything like that.

Michael [0:15:27]: We're really focused business by business.

Michael [0:15:29]: So as you described it, You know, if we found a highly motivated management team, but they didn't have a next generation leaders and they had a short window before they wanted to call it a career.

Michael [0:15:41]: We're not a good fit.

Michael [0:15:42]: They would quickly realize that because they're gonna be owning the equity, and the question they would have as well I don't have anybody to pass to.

Michael [0:15:50]: Right?

Michael [0:15:50]: Right.

Michael [0:15:50]: And we wanna perpetuate that equity locally.

Michael [0:15:52]: We want generation one to sell the generation two to generation three.

Michael [0:15:56]: So that's what I said is when you get down, the Broad street model may not be as well known as some So people are usually when we get to spend time with them understanding all the elements of it, the attributes of it, and it's kinda self discovery.

Michael [0:16:10]: They either get more excited about the model and they say this isn't for me.

Michael [0:16:14]: You know,

Callan [0:16:15]: and it tracks as much as a repel.

Callan [0:16:16]: Correct.

Michael [0:16:16]: And I think that's a good situation.

Michael [0:16:18]: I mean, we...

Michael [0:16:18]: You know, I've come to, you know, I've been in Broad street now just over four years.

Michael [0:16:21]: I've come to really appreciate the fact that it's different enough, but there is self lot.

Michael [0:16:26]: You know, for a lot of people, we're not a good fit We're not the right answer for them when they think about how they wanna take their firm forward and what they wanna do.

Michael [0:16:32]: But for those that are, you know, basically still in the business do wanna perpetuate the firm, do have an next generation leaders are trying to actually continue to grow both organically and wanna do more inorganic.

Michael [0:16:46]: We start to get to be a very interesting option.

Michael [0:16:49]: And as I mentioned to you a little bit on our model, you know, this ownership thing was unique.

Michael [0:16:54]: There are other pieces of it that Rick put in place that I think are really unique.

Michael [0:16:58]: One was that when he started the firm.

Michael [0:17:00]: He said, look, we're gonna pay dividends.

Michael [0:17:01]: And the way he did that is if, you know, we own sixty percent on partner owns forty.

Michael [0:17:05]: At the end of a quarter, we tally up the P and L, basically, a accrue for bonuses, pay expenses if they've done M and A, we'll pay for debt, etcetera.

Michael [0:17:13]: But if there's a hundred dollar left, we split it with our partners.

Michael [0:17:16]: So we're paying out dividends to shareholders locally, which that's not the major wealth creator for anybody it reminds people that the equity is real and alive.

Michael [0:17:25]: The second thing we do with those dividends is for the next generation leaders, we'll try to help finance the next generation leaders to become shareholders because we want them to buy into the firm Five from generation one.

Michael [0:17:36]: Tool give them loans to basically, you know, make those purchases and the dividends help pay interest on a loans.

Michael [0:17:42]: So that's just the unique attribute of our model.

Michael [0:17:45]: It's not gonna be the the winning attribute that's gonna win everybody over, but it's a very interesting one.

Callan [0:17:50]: I mean, I think the went in particular.

Callan [0:17:52]: I've went through this process when I was younger and it was like, okay.

Callan [0:17:56]: This is not the easiest to just go get through.

Callan [0:17:58]: It feels like it would be easy because you hear so many people doing it, but actually getting a bank, getting all that, what you have to put up, what you have to risk on that.

Callan [0:18:05]: Correct.

Callan [0:18:05]: The dividend interesting, and I've heard you talk about it how it makes it real.

Callan [0:18:09]: You know, a lot of times we see equity.

Callan [0:18:11]: I think most of us know that's how you're gonna gain true generational wealth through equity, but seeing a dividend check matters.

Callan [0:18:17]: Makes it real that makes sense to me.

Michael [0:18:19]: The second element I tell you.

Michael [0:18:20]: So there's two elements that I've come to appreciate.

Michael [0:18:22]: One is the dividend, as you said, it's a reminder.

Michael [0:18:25]: The second is, I describe it as a lot of financially backed firms for private equity backed, etcetera.

Michael [0:18:31]: The shareholders locally don't have liquidity.

Michael [0:18:33]: Until there's an event.

Michael [0:18:35]: What under that event is, You know, our partners for the most part do liquidity events twice a year for all their shareholders.

Michael [0:18:42]: So they'll sell equity from people generation one to generation two twice a year and we'll help support that.

Michael [0:18:48]: So you have local shareholders who have liquidity if they want.

Michael [0:18:52]: Now most don't because they wanna actually have that equity compound and they're, you know, fully committed the business they're gonna work for years and years and years.

Michael [0:18:59]: But when the time comes that you want liquidity, our partners can provide it for their shareholders.

Michael [0:19:03]: And to me what I've come to realize everything that's going on in the industry, that's a really unique attribute.

Michael [0:19:09]: And if a local shareholder has a situation where there's not enough demand locally.

Michael [0:19:15]: Broad street will step in and create liquidity for the person, and then we'll hold a treasury stock and give it back locally when that shareholders available.

Michael [0:19:22]: Interesting.

Michael [0:19:22]: So for those who understand the model, you know, it's great to have a financial sponsor, it's great to have equity, but can you get liquidity.

Michael [0:19:30]: And I would say that over the last number of years, I've come to appreciate.

Michael [0:19:33]: And our partners to affirm are completely committed to this.

Michael [0:19:37]: You know, they're trying to take care of their shareholders, and they usually have demand in the next generation.

Michael [0:19:43]: So again, just a element of the model that Rick created when he started it.

Michael [0:19:48]: And it's stood the test of time.

Michael [0:19:50]: And I think, you know, for those who in the know and actually study some of these things when they learn that, they're like, hey, there's a dividend, and okay.

Michael [0:19:57]: That's interesting.

Michael [0:19:58]: And then, by the way, there's always liquidity.

Michael [0:19:59]: Wow, that's really interesting.

Michael [0:20:00]: Now they hope they never wanna use it until the last day than when they decide to get liquid.

Michael [0:20:05]: Mh.

Michael [0:20:06]: But it's great to have that option available to you.

Callan [0:20:10]: So I wanted in zero on one piece of that's in particular.

Callan [0:20:12]: So what you said was if they can't find somebody locally to buy it.

Callan [0:20:16]: Which I'm sure there's probably fairly easy to do.

Callan [0:20:18]: But let's say you can.

Callan [0:20:19]: Broad street will buy that, and you said it'll put it in treasury stocks.

Callan [0:20:23]: So at the end of the day, you're saving that for

Michael [0:20:25]: Next owner.

Callan [0:20:26]: Yeah.

Callan [0:20:26]: Locally.

Michael [0:20:27]: So you

Callan [0:20:27]: don't own a hundred percent of it essentially.

Michael [0:20:29]: Correct.

Michael [0:20:29]: Yeah.

Michael [0:20:29]: And I think like I said, this was the whole concept of the model, which is listen.

Michael [0:20:32]: We work on behalf for our partners.

Michael [0:20:34]: As I say to one of our core partners myself and anyone else who carries Broad street business card, we work for our partners.

Michael [0:20:41]: And we're there to make sure that partners can continue to grow their firms, lead their firms, make their firm stronger over time and these attributes about having local ownership and also having a dividend liquidity or, you know, I think terrific terrific elements of our model.

Callan [0:20:57]: So taking the other side on this, I'm a high growth entrepreneur, very motivated, and I can get stock in the holding company from one of these other groups.

Callan [0:21:07]: Let's just say Harbor whomever Might be.

Callan [0:21:09]: Why would I not do that?

Callan [0:21:11]: When you look at some of these, some of these have grown not to say all of them have had the same growth trajectory.

Callan [0:21:15]: And, you know, we saw the and sure came out with the big hit that happened last year, and there's flips in the radar.

Callan [0:21:22]: Anytime there is reserve public markets, but why would I not do that?

Michael [0:21:27]: Well I think it's back to, again, the self selection process.

Michael [0:21:30]: We're investing with and behind.

Michael [0:21:34]: Highly motivated successful teams.

Michael [0:21:37]: Who wanna bet on themselves.

Callan [0:21:39]: Would you not argue though.

Callan [0:21:39]: I can make that argument that that those...

Callan [0:21:41]: At any one of those different companies, those big ones, they're they're highly motivated and so I think is...

Michael [0:21:47]: Think if you're...

Michael [0:21:47]: Again, the economist would probably say, hey, You worry about free riders.

Michael [0:21:51]: Reason why you want parent company stock is because you wanna ride on somebody else's coat tails.

Michael [0:21:57]: That's not our partners.

Michael [0:21:58]: And there's a lot of, you know, large firms that give out top c equity your parent company equity we've done fabulous well.

Michael [0:22:04]: I'd say some of our partners done fabulous well.

Michael [0:22:06]: Yeah.

Michael [0:22:06]: Because they're highly motivated, high quality teams that are very focused on driving value.

Michael [0:22:12]: So, again, you know, you just look at this and go, there are benefits and drawbacks to pop equity not having top equity.

Michael [0:22:19]: I think in our model, our partners are very, very embracing of the whole concept, which is hey, give me the support and tools if I can use them to grow.

Michael [0:22:27]: They'll make the decision, what if anything we can do to be helpful to him, totally their decision.

Michael [0:22:31]: They're kind of, you know, steer the ship, they're driving the car, they're in charge, but they're betting on themselves.

Michael [0:22:37]: Mh.

Michael [0:22:38]: And they're like, hey, one of the reasons you come to Broad street is.

Michael [0:22:40]: I'm again, I want a capital partner.

Michael [0:22:43]: Might wanna take a few chips on the table, but I wanna grow.

Michael [0:22:45]: Mh.

Michael [0:22:46]: And we're there to figure out ways to help them and give them support to grow organically.

Michael [0:22:49]: We give them all the tools in the toolbox to grow inorganic.

Michael [0:22:52]: You know, we're gonna give them ideas around data and analytics and all kinds of productivity ideas So these are folks they give me that, and I'll be very successful, and they proven they can be.

Callan [0:23:04]: No question.

Callan [0:23:05]: If you look at any of those core partner agencies, those are very well respected, brokers and agencies in the space.

Callan [0:23:10]: You know, one of the things I'm curious about is for this model to work.

Callan [0:23:14]: We'll talk about the long term investors that you have in a little bit.

Callan [0:23:17]: But before I get to that.

Callan [0:23:18]: One of the things I'm curious about is, this takes a significant...

Callan [0:23:22]: Maybe I'm wrong, But this takes a significant amount of trust from the agency to say lot of this could sound great on paper.

Michael [0:23:31]: Sure.

Callan [0:23:31]: And you could point to the track record?

Callan [0:23:32]: No question.

Callan [0:23:33]: But how do you maintain that trust?

Callan [0:23:35]: How does that actually work.

Callan [0:23:37]: Do you guys set guide rails or things like that?

Callan [0:23:40]: Can you walk us through what that looks like?

Michael [0:23:42]: Sure.

Michael [0:23:42]: I mean, I think the first reaction After to that is, like, look, as you said, as folks to get to know the Broad treat model, you know, once they understand the attributes a second after they do that, then when we say, go talk to anyone of our partners.

Callan [0:23:54]: Mh.

Michael [0:23:55]: And once we're sort of in a discussion and they're learning and things like that, you know, we'll them a whole list of names, they call anyone you want.

Michael [0:24:02]: And asking what it's like to live inside the family, which I think is probably the most transparent way to do it because these are the folks that are dealing with us every day.

Michael [0:24:10]: The other thing is our whole model's built around.

Michael [0:24:13]: We don't have a huge team.

Michael [0:24:14]: The Broad street team itself is very small.

Michael [0:24:16]: So we don't have the ability to, like, run anything or do anything.

Michael [0:24:19]: We're betting on our partners.

Michael [0:24:20]: Mh.

Michael [0:24:21]: So that's the other thing that they quickly see.

Michael [0:24:23]: They're like, look, we hear from these other partners who are living with you.

Michael [0:24:26]: We see what you've got and we're like, they get a lot of confidence that this is not gonna be a situation, which is gonna be like a bait and switch or pull the rug out from underneath them.

Michael [0:24:36]: And one of the things I found when I showed up four years ago.

Michael [0:24:39]: First time I met the partner group, we bring the part CEOs together a couple times a year.

Michael [0:24:43]: You know, I walked out of the room, the first evening after spending a day with him, and I said Rick Miley who founded of the firm.

Michael [0:24:49]: I said that's a really a neat group of people, and he started laughing.

Michael [0:24:52]: And he's like, yes.

Michael [0:24:53]: He's men and women and they're all great.

Michael [0:24:54]: Terrific.

Michael [0:24:54]: I said, no, I thought I'm not being clear.

Michael [0:24:56]: I said there's two reasons why I think this is unique.

Michael [0:24:58]: One is every person in that room is a hundred percent engaged in their business.

Michael [0:25:03]: That was not, like, a get together to find out when the bar opens and, you know, what's for dinner.

Michael [0:25:07]: This group was one hundred percent focused on trying to build their firm.

Michael [0:25:11]: Mh.

Michael [0:25:11]: And they found that the other partners that were there, or great resources for best practices and experiences, and, I mean, this was a highly engaged, highly engaged leadership team.

Michael [0:25:22]: The second thing was I noticed everyone was happy.

Michael [0:25:26]: And that to me is really unique because I think if you go to any great business school, you go down the street to Ohio State, you can go to Harvard, go to Kellogg in Chicago anywhere you want.

Michael [0:25:36]: And I think most of the academics would tell you three years after an acquisition or a partnership of any type.

Michael [0:25:41]: A third of the people are happy, a third or am ambivalent, a third openly hostile.

Michael [0:25:44]: Mh.

Michael [0:25:45]: And what you found with the Broad street model that Rick and the team created was because it's a little different.

Michael [0:25:51]: This is ownership style, everything.

Michael [0:25:52]: There's a lot of diligence done on both sides.

Michael [0:25:55]: Yeah.

Michael [0:25:56]: People walk into this knowing exactly what it's gonna be like.

Michael [0:25:59]: And our commitment and what Rick's delivered and I'm committed to doing is, you know, the way it runs is the way it's gonna run.

Michael [0:26:07]: And three years now or five years or seven years, it's gonna be the same.

Michael [0:26:10]: And I think people have, as you said, there's a history here.

Michael [0:26:14]: They've seen it.

Michael [0:26:14]: Nothing's really changed.

Michael [0:26:16]: The firms have gotten a lot bigger.

Michael [0:26:17]: They're a lot more sophisticated, a lot more capable, but the model is still the same.

Michael [0:26:22]: You know, we're betting on them.

Michael [0:26:23]: And our job is to support them and building the firms that they want to have and continue to grow in the future.

Michael [0:26:29]: And I think that to me is, you know, one of the things when you meet someone new you'd say here it is.

Michael [0:26:34]: Go do your own diligence, make sure you're comfortable.

Michael [0:26:36]: This is how we operate.

Callan [0:26:39]: You know, what are the questions that I'm kinda curious about as we're having this conversation is you were c president of Ao.

Callan [0:26:45]: And so you are already in a really high pressure situation just by nature of Ao in their position in the market?

Callan [0:26:52]: A lot of times, you'll see that move going to one of the private equity back because you personally can get your equity paid out every three to five years.

Callan [0:27:00]: This is a different model is we kinda, like, you guys have very long term capital.

Callan [0:27:05]: I mean, I know Ontario teacher's fund was original and for still is a big partner, but they owned eighty some percent.

Callan [0:27:11]: I could be wrong on that number.

Callan [0:27:12]: But for a very long time, and they're typically investing in the private equity company.

Callan [0:27:18]: They're are oftentimes the largest Lps within a lot of the private equity companies.

Callan [0:27:21]: So you've got this long term patient capital.

Callan [0:27:25]: For you personally, why was this so intriguing.

Callan [0:27:28]: And I'm not to say that you're just purely motivated by money by any stretch, but this is a different role than I would zoom at you had at Ae and that could have been in the market.

Callan [0:27:37]: What drove you here?

Michael [0:27:39]: Yeah.

Michael [0:27:39]: I mean, I think, look, I often joke with Rick that I sort of stumble across Broad street, but I had a good fortune of stumbling across Broad street and making a connection with Rick and he was kind enough and thoughtful enough that would basically started, you know, a discussion and I ended up coming out and spending some time with Rick and the team and he wanted to actually work on organic growth.

Michael [0:28:00]: I mean, Rick literally saw this, and this is five plus years ago.

Michael [0:28:04]: He said the firm gotten large enough.

Michael [0:28:06]: Our partners have all gotten large enough that organic growth has to be a bigger part of it.

Michael [0:28:09]: Mh.

Michael [0:28:09]: And a professional services firm, organic growth.

Michael [0:28:12]: Is the first second and third most important Sure.

Michael [0:28:14]: You know, priorities.

Michael [0:28:15]: Acquisitions great, and we obviously wanna enable our partners to do as much tuck in acquisitions as makes sense for them, but we're wanna drive more organic growth.

Michael [0:28:23]: And through that invitation, and come spend time with the team a little bit and work with Rick.

Michael [0:28:28]: I just started to realize how you need this model was and I'm a big believer that in professional services in the insurance distribution space, alignment of interest is essential.

Michael [0:28:37]: I mean, these are people based businesses.

Michael [0:28:39]: And if you look no matter whether you're a small firm or a large firm, you know, the more you can align interest, the more successful you're likely to be.

Michael [0:28:48]: And when I saw this ownership model and the track record of success it had and the partners that it attracted, I was like, This is really interesting.

Michael [0:28:57]: And I'd only seen it once before really at some scale and that was in Australia with off brokers and said steadfast, different variants.

Michael [0:29:04]: But in my past travels, I'd seen that down in Australia, and I always thought, hey, this is a really unique model and you see it in some other professional services beyond insurance brokerage, but that's what really got me excited about it.

Michael [0:29:16]: And you saw the people had attracted it saw the level of energy that you had at these core partners.

Michael [0:29:20]: And I said, this is what you want in professional services.

Michael [0:29:23]: And your point, there's really great firms out there in different models.

Michael [0:29:26]: But I'm like, wow.

Michael [0:29:27]: This one's really unique.

Michael [0:29:28]: So, you know what it ended up that was with serendipity that I met Rick and got to understand the model.

Michael [0:29:34]: Got to know it.

Michael [0:29:35]: And I just said, hey, this is, I think something that ultimately is a great mission driven organization.

Michael [0:29:42]: It's all about actually supporting our core partners their success is our success.

Michael [0:29:47]: And I believe it I've seen it my entire professional career.

Michael [0:29:50]: I think it's the best way to run a professional services firm.

Michael [0:29:52]: So I was really excited about the opportunity to come work with Rick and learn and then lead the firm, and I'm as passionate and energetic today.

Michael [0:30:00]: As I ever been in my professional career, and I'm trying to do my best.

Michael [0:30:04]: I work for our core partners.

Michael [0:30:05]: My job is try to help with the team I have and the team will continue to grow is to find ways to help them be successful.

Michael [0:30:11]: Mh.

Michael [0:30:12]: And again, if they're successful, we're successful.

Michael [0:30:14]: So that's what got me excited about being here.

Callan [0:30:18]: Is that a culture change to put such a big focus on organic growth.

Callan [0:30:22]: I should be clear.

Callan [0:30:23]: I would say this is across all the largest brokers.

Callan [0:30:26]: I think everybody is...

Callan [0:30:28]: I mean, I don't wanna say scrambling.

Callan [0:30:29]: Scrambling is the wrong word.

Callan [0:30:30]: But I think a lot of people or get a growth is always important, but it feels like this past couple years?

Callan [0:30:35]: It's been exponentially more important.

Callan [0:30:37]: One, do you see that as a bit of a shift with the core partners?

Callan [0:30:41]: And then how do you help support to drive that organic growth?

Michael [0:30:46]: Sure.

Michael [0:30:46]: Yeah.

Michael [0:30:46]: I mean, I think anyone who is a part of a leadership team of a professional services firm, but including insurance brokerage for sure.

Michael [0:30:53]: You know, if you just step back and go, what's the largest wealth creator or value creator within the firm, it's gonna be organic growth.

Michael [0:30:59]: It's organic investments.

Michael [0:31:00]: Mh.

Michael [0:31:01]: You can create value through M and A and things like that, but ultimately, it's organic growth.

Michael [0:31:06]: So you'd say, hey, in a professional service firm insurance broker firm.

Michael [0:31:08]: You're the growing or you're dying.

Michael [0:31:10]: Right?

Michael [0:31:10]: That's it.

Michael [0:31:11]: Mh.

Michael [0:31:11]: Now there'll be hard markets.

Michael [0:31:13]: There'll be soft market.

Michael [0:31:14]: It's still be stages where you have more economic growth.

Michael [0:31:17]: But ultimately, that's the case.

Michael [0:31:19]: And I think for our partners, give all the credit in the world, you go skip the last eighteen months where it's been a softer market.

Michael [0:31:26]: But before that, everybody on the P and c side and even a little bit on the E side, had a lot of tailwind.

Michael [0:31:32]: And our partners would d organic growth.

Michael [0:31:35]: So they would look at organic growth and its fundamental building blocks.

Michael [0:31:38]: So exactly what's your.

Callan [0:31:40]: Mh.

Michael [0:31:41]: What's your rollover?

Michael [0:31:41]: So how much you getting paid for business you retain?

Michael [0:31:43]: A hundred dollars last year is it a hundred and four a hundred two.

Michael [0:31:46]: And what are you selling to existing clients?

Michael [0:31:49]: What are you selling, you know, in terms of new new?

Michael [0:31:51]: And then they would take out rate and exposure?

Michael [0:31:53]: And to me, that's, like a level of sophistication and that you revel.

Michael [0:31:57]: You know, when you have partners that are basically saying, hey, let's separate performance from health.

Michael [0:32:02]: When everybody had, you know, five six, seven points of tailwind from rate.

Callan [0:32:06]: Yep.

Callan [0:32:06]: That's great.

Callan [0:32:07]: But what's the health

Michael [0:32:08]: of the business?

Michael [0:32:08]: If you take out rate and exposure, you're growing three, you're growing four.

Michael [0:32:11]: And to me that is a situation where again, I get really excited that our partners are that sophisticated that they think about it like that, and they'd say, hey, I wanna make sure that my health of my business is very strong so that when we do have softer markets when we have softer rate environment, we're still able to grow.

Michael [0:32:28]: And to me that's, you know, again, a well run thoughtful professional services firm is gonna do that.

Callan [0:32:34]: I wanna talk a little bit about and this could cover the investors and such, but, I mean, on paper...

Callan [0:32:39]: So everything that you're saying.

Callan [0:32:41]: Even know though I'm talking about counter points.

Callan [0:32:42]: It makes total sense.

Callan [0:32:43]: The model's is very interesting.

Callan [0:32:45]: Why can others not pulled us off.

Callan [0:32:48]: And there's some examples.

Callan [0:32:49]: I think, you know, Keystone has started to do this over the past couple years and now they're pb back.

Callan [0:32:54]: So they're gonna be in the three to five year cycle most likely.

Callan [0:32:57]: And leather group has got a ownership models as well.

Callan [0:33:00]: Why has Broad been so successful and why can't others recreate in exactly the way that you've done it?

Michael [0:33:07]: Yeah.

Michael [0:33:07]: I mean I think the short answer is there are versions out there not only in the churn brokerage firm but in all professional services.

Michael [0:33:13]: I just think, look, Broad Street, you know, and I had nothing to do with it, you know, chose great partners.

Michael [0:33:18]: You had people who did this broaden this model who at a point in their growth of their firm where they were looking for resources.

Michael [0:33:26]: And then been wildly successful.

Michael [0:33:28]: And you just look at the development of some of these firms over the last ten or fifteen years unbelievable.

Michael [0:33:34]: So I think we have a great track record.

Michael [0:33:36]: And, like, you said, if people are looking around and they're intrigued by this concept of ownership and they're looking for resources to grow.

Michael [0:33:43]: Very humbly, you know, we have a great resume.

Michael [0:33:45]: Go talk to anyone reporters.

Michael [0:33:48]: So I think if people are looking around and thinking about it there.

Michael [0:33:51]: I'm sure you can find another option somewhere or something like that.

Michael [0:33:53]: But, you know, we got a pretty good track record of success.

Michael [0:33:56]: And part of the benefits of being part of our family is we really...

Michael [0:34:00]: And our partners are unbelievably collaborative.

Michael [0:34:02]: They wanna share amongst the family in terms of best practices and what they see as, you know, challenges in the business and hurdles and how they can learn from another, and I think that's very attractive.

Michael [0:34:14]: The people who are trying to build their firm to say, hey, I've got a set other partners that I can collaborate with.

Michael [0:34:19]: When it's helpful to me or helpful to a client.

Michael [0:34:22]: Mh.

Michael [0:34:22]: I can also learn for another.

Michael [0:34:23]: Our partners go serve clients together.

Michael [0:34:25]: Our partners talk about the Broad Street national platform we're a little show up in front of clients and basically say, you could be here in Ohio and have a client in California and our partner here and Ohio will grab the partner in California Mh.

Michael [0:34:38]: And serve the client together.

Michael [0:34:39]: Or if someone has specific expertise in captive or in, you know, wraps or whatever it is, they'll partner together.

Michael [0:34:46]: And I think that to me is a little bit of, you know, it was never mandated.

Michael [0:34:51]: It was never required, but our partners are highly motivated professionals, and they see other great professionals, and they wanna work together.

Michael [0:34:58]: And by the way, they realized realize they're gonna win more often, and they're gonna make more money.

Michael [0:35:01]: So part of our job

Callan [0:35:02]: is just to facilitate that word people wanna work together.

Michael [0:35:05]: And there's an enormous collaboration and dispute decor, speed decor across our partners to say, hey, we can learn from one other.

Michael [0:35:13]: You know, we can work together on clients together.

Michael [0:35:16]: We can partner together with carriers.

Michael [0:35:17]: There's countless way is to collaborate.

Michael [0:35:19]: And, you know, again, our job is just to say if that's something our partners wanna do and they wanna make those connections, we're gonna try to help facilitate.

Callan [0:35:27]: Can you break down the investment structure in broad street specifically a little bit?

Callan [0:35:30]: And why that's so unique to the market?

Michael [0:35:33]: Yeah.

Michael [0:35:33]: I mean I think...

Michael [0:35:34]: And you mean sort of our investor and mentions.

Michael [0:35:37]: Yeah.

Michael [0:35:38]: Yeah.

Michael [0:35:38]: So I think if you go back in time,

Callan [0:35:40]: you know, when

Michael [0:35:40]: Rick founded of the firm and was part of state Auto.

Michael [0:35:43]: And for a whole bunch of different reasons, state Auto wasn't getting credit for the investments they were making with the rating agencies, etcetera.

Michael [0:35:50]: You know, Rick to his credit with the team that was here, went and looked long and hard and made the connection with Ontario teachers pension plan.

Michael [0:35:58]: And for those who were in this space, the Canadian pensions are revered.

Michael [0:36:03]: And basically, viewed as wildly sophisticated investors who run their pensions to, you know, perform.

Michael [0:36:11]: Mh.

Michael [0:36:11]: And, Rick again, wise wise decision basically got connected with Ontario teachers.

Michael [0:36:18]: And they've been with us for fifteen years.

Michael [0:36:20]: And they are super sophisticated and extremely long term Oriented.

Michael [0:36:25]: And wildly excited about this sector of the economy and willing to support the team and our partners And I think when I walked in and realized who was supporting Broad street, you know, having long term as some of the industry called, like, semi permanent capital is a great attribute.

Michael [0:36:45]: I mean, Ontario teachers is again, a super sophisticated investor.

Michael [0:36:49]: They don't really need the capital.

Michael [0:36:51]: They don't want the capital.

Michael [0:36:52]: They actually money to put the work and we run the firm off institutional debt.

Michael [0:36:56]: So don't really ask them for capital.

Michael [0:36:58]: So it's a fabulous relationship.

Michael [0:37:00]: And last year, until teachers have been with us for fifteen years, they were open if they could find the right partner, we could find the right partner to bringing someone else in just because of the growth in the firm because of, you know, the investment gotten so large for them, even though they didn't technically need the capital.

Michael [0:37:15]: So we went and looked around and found another Canadian pension.

Michael [0:37:18]: British Columbia.

Michael [0:37:19]: And with British Columbia came Ethos capital, which Brent and Eric, the two principal there are great.

Michael [0:37:25]: Know, the insurance industry cold and White Mountains, which is a, you know, publicly traded firm that invest in the insurance sector.

Michael [0:37:31]: So they came along as well.

Michael [0:37:33]: So we got another great set of partners that are long term oriented, you know, understood the model were completely committed to it.

Michael [0:37:40]: So I look and I go, you know, when I joined having Ontario teachers as our partner, I've viewed as a real distinctive asset, and we're even in a better situation today with British Columbia, Ethos and White Mountains joining them.

Michael [0:37:54]: So I think we've got people who really know the space who are long term rated completely committed to the model we have.

Michael [0:38:01]: So again, we're in a very privileged position when we think about who stands behind us.

Callan [0:38:06]: Why is that long term capital so important?

Callan [0:38:08]: Could this model run without it?

Michael [0:38:11]: I don't know if it could run without it.

Michael [0:38:12]: I don't have to figure that out because we've got it?

Michael [0:38:14]: I think the issue Got is, you know, again, and you highlighted some of this.

Michael [0:38:18]: It can work, but, you know, we have the luxury that we're not waiting for an event.

Michael [0:38:21]: We have partners who completely embrace the idea of having a dividend.

Michael [0:38:25]: You know, we have partners who think about not the next quarter or the next year or are we at the three year marks?

Michael [0:38:32]: We gotta start pretty up the business because we gotta basically create a liquidity event.

Michael [0:38:36]: You know, they're committed for the long term.

Michael [0:38:38]: And it's a very...

Michael [0:38:38]: Again, privileged position to be in to talk about how do we create conditions to support our partners to grow and build their firms with no anxiety about the next quarter or the next year or where we're at in our investment hold.

Michael [0:38:51]: Mh.

Michael [0:38:51]: And I think for us, just given our the team...

Michael [0:38:53]: The leadership team is background around and stuff like that, we recognize that's unique.

Michael [0:38:56]: You know, we recognize that having semi permanent capital eliminates a lot of distractions and doesn't talk about spend half the time worried about when the events gonna come and how we're gonna create conditions for an event.

Michael [0:39:06]: We're focused on helping our partners grow.

Callan [0:39:09]: Well, it gives you the...

Callan [0:39:10]: I mean, if I'm playing that back.

Callan [0:39:12]: What I'm hearing you say is that the investors that you guys have...

Callan [0:39:16]: I mean, they probably almost look at this as a...

Callan [0:39:17]: I'm assuming ontario teachers looks at this is a cash flowing asset.

Callan [0:39:20]: We are getting money pretty consistently over time, we don't have to...

Callan [0:39:25]: This is not something that we have to sell in order to improve where we're at right now.

Callan [0:39:30]: And as a result of that, with these and the other partners that have committed to this long term as well.

Callan [0:39:35]: You're able to make that same promise to your entrepreneurs that are coming in into these core partners.

Callan [0:39:43]: You can't go private equity and do that.

Callan [0:39:45]: And I'm not saying by any stretch to private equity model, is right or wrong.

Callan [0:39:49]: Sure.

Callan [0:39:50]: It's just another growth facility, and it's...

Callan [0:39:52]: If you're lying to wanting to get out, that's probably is a great model.

Michael [0:39:56]: Yep.

Michael [0:39:56]: Maybe I'd say it this way.

Michael [0:39:57]: So one of the reactions I haven't, and I'd certainly say it's been reinforced with my four years here.

Michael [0:40:01]: Again, it...

Michael [0:40:02]: This is about fit and matching, you know, what models like to what a firms looking for.

Michael [0:40:08]: If you look, it's not all of them for sure, But oftentimes you get people who are first or second generation who've got visions to keep their name on the door.

Michael [0:40:17]: Mh.

Michael [0:40:17]: Bring other people, whether it's a family member or people they grow up that wanna run, they're looking to perpetuate and they wanna keep growing the firm.

Michael [0:40:24]: That becomes a really strong element of our model.

Michael [0:40:27]: We're not looking to basically do anything other than perpetuate the firms we back.

Michael [0:40:31]: Mh.

Michael [0:40:32]: So it's not surprising that some end up being family run businesses where they see the next generation who can take leadership positions or some of them, who see the value of keeping the brand that they've gotten in their local market continuing to grow and thrive.

Michael [0:40:47]: Yeah.

Michael [0:40:47]: You know, again, those are attributes of the business that fit well with our model.

Michael [0:40:51]: Mh.

Michael [0:40:51]: There's other elements of our model that could, you know, be attractive to folks that aren't running a family business that are in different situations, but Again, that's why I think this whole process of having the opportunity to spend time to say is there a fit and this is a fit that's gonna last for a very, very long time is critical Yeah.

Michael [0:41:09]: To people joining our family.

Callan [0:41:12]: Well, it's a super interesting model.

Callan [0:41:13]: You know, if I'm a high growth agency, and I'm looking at my options.

Callan [0:41:19]: I think if you're talking to them, let's say they're looking I have to assume most people come find Broad Street.

Callan [0:41:25]: Is that fair am I wrong?

Michael [0:41:27]: Yes.

Michael [0:41:27]: I think and also, you know, we're in situations our partners are out trying to meet people for sure.

Michael [0:41:32]: Right.

Michael [0:41:33]: So you think about most of our M and a it's our partners.

Michael [0:41:35]: Know, they're very well known local regional, super regional agencies.

Michael [0:41:39]: Out talking to people all the time.

Michael [0:41:41]: So I think it's two way.

Michael [0:41:42]: People find them, and they find others for the larger firms that we meet.

Michael [0:41:46]: You know, it's a little bit about some people find us.

Michael [0:41:48]: We find them sometimes.

Callan [0:41:50]: But I only...

Callan [0:41:50]: And I should clarify.

Callan [0:41:51]: I was talking about core partner side.

Callan [0:41:53]: Agencies And I say that because at that size, anybody will buy them for the most part.

Callan [0:41:59]: I mean, maybe not every single one, but most all of them.

Michael [0:42:01]: They can find people to talk.

Callan [0:42:02]: Exactly.

Callan [0:42:02]: That that's not a challenge.

Callan [0:42:04]: But I I have to sue, and they're gonna know the nuances because they're gonna have peers that have went through all of.

Callan [0:42:09]: So I was kinda curious do most people come to you verse you have to go out and find them.

Michael [0:42:14]: Yeah.

Michael [0:42:14]: The one thing I would say is, I think it's probably not surprising and it's probably true with everyone.

Michael [0:42:18]: I think we spend a lot of time making sure that they understand the unique attributes the model.

Michael [0:42:22]: Mh.

Michael [0:42:22]: Because until you've, like, walked in someone's shoes or until you live today and you don't really fully get it.

Michael [0:42:28]: Right?

Michael [0:42:28]: And as we're talking about, you know, exactly what does should mean, what happens if someone wants to sell, you walk them through all these things, you explain the dividend that gets paid.

Michael [0:42:38]: You explained as we were talking about the fact that we hope that you'll pass...

Michael [0:42:43]: Keep recycling the equity locally and the first generation is gonna get paid at market for the additional Eb and growth they've had and things like that.

Michael [0:42:51]: We mark our partners to market every quarter.

Callan [0:42:53]: I was curious about.

Michael [0:42:55]: Yeah.

Michael [0:42:55]: And that way, they get the benefits of growth.

Michael [0:42:57]: Yep, they get paid for it.

Michael [0:42:58]: But we're there at to step in if we need to, and our whole hope is that someone will come along and buy it locally.

Michael [0:43:02]: So you walk someone through that into your point, that's usually an education process so that they understand.

Michael [0:43:08]: Like I said, as you go through that with someone, and they really understand how our model works for some more excitement for others are, like, well, this probably isn't gonna work for me whatever reasons.

Callan [0:43:18]: Now.

Callan [0:43:18]: And I think it's super interesting.

Callan [0:43:19]: And you said it earlier, and you wanted to attract as much as it repel, and for the right agency.

Callan [0:43:26]: Man, is it really interesting model for somebody different.

Callan [0:43:30]: They're probably looking.

Callan [0:43:30]: Like, yeah.

Callan [0:43:31]: I'm not doing that.

Callan [0:43:31]: Right but.

Callan [0:43:32]: So.

Callan [0:43:33]: I'm super excited we got to break all of that down, get into the weeds Last question I have for you, you know, you're sitting here ten years time, we're having this conversation.

Callan [0:43:43]: Everything went to plan.

Callan [0:43:44]: What does that look like?

Michael [0:43:47]: Yeah.

Michael [0:43:47]: We have, you know, larger, a few more partners than we have today for sure.

Michael [0:43:52]: But probably the most important attributes that I'd like to see ten years from now if everything goes well.

Michael [0:43:58]: Is our partners are all still a hundred percent engaged in their businesses and they're still all happy.

Michael [0:44:03]: Mh.

Michael [0:44:03]: To me again, that's what I walked into what Rick and the team had built, and I think Again, if you step back and think about our model and how we operate and also just professional services.

Michael [0:44:13]: If you have that, the firm is gonna be doing fabulous well.

Michael [0:44:16]: If you have highly motivated entrepreneurs that are still really working, Know, no one's retired and forgot to tell you, as I like to say, which can happen in this industry and another professional services.

Michael [0:44:26]: If you've got people really engaged in their businesses, and they're also really happy with the choice they made.

Michael [0:44:33]: Every one of those partners will be wildly successful and therefore Broad Street will be successful.

Callan [0:44:38]: Yeah.

Callan [0:44:38]: What about for you personally?

Michael [0:44:40]: I mean, I think that to me is look, I view myself truly, and I get the privilege of working with Rick every day here.

Michael [0:44:45]: I mean, I'm just a steward of the firm for the time and I'm here, you know, my responsibility is to make sure that the firm is stronger every day.

Michael [0:44:51]: I look at this and go ten years from now.

Michael [0:44:54]: You know, I hope the firm is dramatically stronger and more capable than it is today, which means one of our partners is stronger and more capable.

Michael [0:45:00]: And that's my hope and that's my job.

Michael [0:45:03]: That's what I gotta do.

Callan [0:45:04]: Yeah.

Callan [0:45:04]: Mike, this was a ton of fun.

Callan [0:45:06]: I really enjoyed getting to understand the model.

Callan [0:45:09]: I think it's one of the most unique models that's out there.

Callan [0:45:12]: Thanks for coming on to break it all down.

Michael [0:45:14]: Yeah.

Michael [0:45:14]: I appreciate the opportunity to talk about hundred percent.

Michael [0:45:17]: Thanks.