Will 2006 Be the Year to Sell Your Business?

Last updated on May 13th, 2019 at 02:36 pm

Waukesha-based R&R Insurance Services Inc. has purchased Menomonee Falls-based AIS Group Insurance & Investment Services and merged its employees and assets to create one of the largest locally owned independent insurance agencies in Wisconsin.

The transaction has been more than two years in the making and took effect Jan. 1.

The new combined company will maintain both the Waukesha and Menomonee Falls offices, as well as R&R’s Fort Atkinson and West Bend offices. AIS Group’s Beaver Dam and Hartford offices will be kept open, but its West Bend location will merge into R&R’s office there.

Financial terms of the acquisition were not disclosed.

Over the past 30 years, R&R and AIS Group each have acquired approximately 10 companies, so the acquisition effectively brings about 20 former brokerages under one roof.

"From a significance standpoint for locally owned businesses, this dwarfs anything from the property and casualty lines standpoint I can recall," said Ken Riesch, president of R&R. "This is huge."

Riesch will oversee both operations.

"The intent is that AIS will keep the full presence, as it has in the past," Riesch said. "We will act as one business. But the intent is to run ourselves as we have in the past."

Greg Loyda, director of sales in Wisconsin and Minnesota for West Bend Mutual Insurance, said he was not surprised that R&R bought AIS because there are many mergers happening in and around the insurance industry now.

"The significance that we look at is with the purchase/merger with AIS, it allows us to continue to keep the AIS book of business under the tutelage of R&R, which is one of our great partners," Loyda said. "We’re really pleased. It constitutes a perpetuation agreement that allows us to keep working with them (both). This is two very fine agencies coming together to form an even stronger agency."

Riesch said AIS will be called AIS, a division of R&R Insurance Services Inc. for the time being. Over the next two to three years, the AIS name will be phased out, he said, while care is taken to ensure that the AIS branding is retained.

R&R has about 120 employees, and AIS Group has about 30. There were no redundancies with the merger, meaning no staff reductions will be needed.

R&R has placed a continual emphasis on growth since the company was founded in 1976, Riesch said, and the acquisition of AIS Group expands R&R’s service territory.

Riesch said AIS Group has been a very profitable business, especially in recent years, which made it an attractive acquisition target.

"We will have more markets to choose from and better coverage for our customers," he said. "It allows every employee to create career paths to grow. It takes the ceiling off both places. You have two very dominant forces putting themselves together under one banner. We’re in love with the locations we have."

R&R’s revenues will be about $21 million for 2005, Riesch said. Largely because of the acquisition, he’s anticipating revenues to double to more than $40 million within the next five years.

"This (the acquisition) is significant growth," he said. "And we’ve doubled basically every five years in revenue so far. There’s no reason to change that. The number gets bigger, but we keep getting better."

Future growth, acquisitions and increased revenues are almost guaranteed, Riesch said, because R&R is keeping all of AIS Group’s employees, including its top management.

"We’re taking the best of the best and melding them together," he said. "That’s why we can say the growth will automatically happen."

All three of AIS Group’s leaders will be staying with the merged company for the foreseeable future. AIS Group president Ronald Bretl will keep that title with the new company. Bretl will also continue to work with his clients and will assist R&R in attracting future acquisitions. AIS Group vice president Daniel Hart will serve as general manager, and AIS Group vice president Tom Baer will become an account executive, continuing his work with commercial clients.

By being acquired, AIS Group will be able to achieve many of its long-term growth goals in a short period of time, Hart said.

"We’re going to grow substantially," Hart said. "We need to get to the next level. And it made a lot of sense to make the jump right away rather than trying to do it ourselves. R&R will bring to us more companies and ancillary services."

Because R&R offers a much wider array of services than AIS Group, the smaller company’s customers will gain access to worker’s compensation seminars, supervisor’s training, claims management, safety consulting and risk management services.

In return, AIS Group brought extensive experience in bonding products to the merger table. The bonding products are used in the construction industry. R&R currently writes about $430 million worth of premium in the construction industry, and Riesch said adding AIS Group’s bonding lines gives R&R an opportunity to increase its capacity in that industry.

The merged companies will be able to offer their employees more chances for professional advancement, Riesch said, because there will be more opportunities with a larger company that is poised for future growth.

"Part of our mission as we grow is to provide stability for our employees, as well as better quality service and opportunities for our customers and employees," Riesch said. "If you’re not trying to grow, you become stagnant and you can’t live true to your mission.

"We can grow our books of business and become a very significant player while giving tremendous stability for our employees," Riesch said. "We’re able to give our employees opportunities to grow and give our customers a better quality of service."

Hart, Bretl and Baer decided a little more than two years ago that their company needed to merge with another firm to enable it to better compete in the marketplace. AIS Group executives met with four or five different insurance brokers in early-stage talks.

"The more we looked at it, the more R&R looked like the best fit," Hart said. "Our cultures are identical, and we’ve both known each other since we started. We were at ease with R&R, their people and our people. We felt that it was the perfect marriage."

As the negotiations gathered steam, Riesch said excitement started to build on both sides, when executives with both companies realized how much experience would come together in the merged company.

"As we got around the table and got closer to the deal, we looked around and saw that we’ve got close to 150 years of experience," Riesch said. "We figured that this should be pretty fun. This is a huge move in the industry. If we can’t make it, no one else can."

R&R Insurance Services Inc.

Headquarters: Waukesha
Year founded: 1976
Employees: 120
Industry: Insurance
Services offered: Personal, commercial and life insurance, retirement plans, group insurance, financial services

IS Group Insurance & Investment Services

Headquarters: Menomonee Falls
Year founded: 1975
Employees: 30
Industry: Insurance
Services offered: Personal, commercial and life insurance, retirement planning, transportation insurance, technology services

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