The telecommunications channel is ripe for consolidation. Master agents and subagents are confronted by price and margin pressures from upstream providers as well as the need to reduce costs and to take advantage of the greater efficiency that comes with scale. Whether on the buy-side or sell-side of a transaction, agents need to focus on all aspects of their operations — including their carrier relationships, human resources, geographic and service scope and operational efficiency — to improve their value proposition.
In response to these growing pressures, an increasing number of agents are investigating their options for organic and inorganic growth. Where possible, agents may elect to take measures to enhance their organic growth by addressing these aspects of their operations, either as an initial step toward a merger or acquisition or as a standalone strategy. In pursuing these alternative strategies, it is essential that agents have a clear understanding of the business and legal issues that must be considered and the procedures for doing so in an efficient and effective manner.
Successful Growth
Successful growth is a byproduct of a careful analysis and understanding of your human, corporate, business and operational assets as well as the opportunities and methodologies for enhancing those assets to achieve your business objectives. Organic growth is possible where the entity has or can readily obtain the required human, financial and technological elements. Inorganic growth is, in many instances, a more complicated process as it not only requires the self-analysis described above, but also an analysis of other participants in your markets. The following are some of the more critical issues that need to be considered.
The Diversity of Your Revenue Streams. While most agents offer a variety of services, a careful growth strategy is particularly important where the agent has a lopsided revenue streams, focused in one or two services. Combining with an acquisition partner can create a more diversified revenue stream and cross-pollination opportunities.
Carrier Relationships. In today’s competitive channel, it is essential that agents have access to a number of carrier relationships. Where the diversity of the carrier relationship is not adequate, it is often possible to improve this circumstance through an acquisition.
