Value Creation

The concept of value creation is based on the premise that successful organizations bring value to their customers, their employees, and investors and that if done appropriately all three are not just rewarded, but are linked together in a symbiotic relationship. Their goals are mutually aligned. Increasingly, however, it seems that value creation has been corrupted and more than ever corporations have swung radically toward wealth creation, either for the benefit of a few owners in a private company or the investors in a public company.

This was never more in evidence than during the Wall Street collapse in 2008. The drive to create enormous wealth overshadowed all the tenants of value creation with the result being financial meltdown. This disturbing trend is also visible in the private sector – in our space in the insurance industry. More than ever there is desperation to grow, primarily through acquisitions, in order to simply get bigger and create more wealth for a few investors. The losers are customers and employees who are often forgotten in the deal.

As a 75-year-old private company that has had the good fortune to develop an enviable client list, attract a talented staff and build a reputation for integrity and professionalism, we continue to be a target of many companies desperate to grow. We are bombarded with inquiries to sell our firm and become a cog in a bigger wheel.

There is nothing inherently wrong with growth through acquisition, or being acquired for that matter. In fact, it’s a useful strategy to bring new expertise into your organization, to expand your footprint, bring more services (more value) to a larger client base and infuse capital that can be used to grow needed resources and infrastructure. That makes sense as a business plan. What’s increasingly happening today is acquisition and growth as a financial plan.

Parker Smith & Feek was founded in 1937 and is operated today on the basis that our business operations must match our core values: Focus on client objectives; Commit to the success of all team members; Act with uncompromising integrity; Demonstrate intellectual curiosity. Nothing about our core values talks of creating wealth for a few. Our company’s founders had many opportunities to execute a different exit strategy than an internal sale of their ownership, but they eschewed wealth for values and all owners since have elected to perpetuate as a private, employee-owned company. That has directly resulted in the clientele, staff, and culture so crucial to our success.

In business, as in life, there are no guarantees. None of us can ever say ‘never’. Good planning, good execution, and good luck are as important in business as they are in health. Currently, our business future is in our own hands. We have the luxury of being able to look at every opportunity through the lens of our values system and to make short and long-term decisions that fit those values and inure to the mutual benefit of all our stakeholders – clients, employees, and investors. It’s a strategy that has served us for 75 years and will continue to well into the future.

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