BUY? SELL? PARTNER?
The Firm Shakes Up the M&A Industry with an
Innovative Opportunity for Two Business Owners
Nita Chisari had been working as a senior claims adjuster in the corporate insurance industry for several years when she decided it was time for a change: She wanted to start her own business.
“In 1996, I got downsized from a company,” Chisari said. “They went bankrupt, and that caused me to examine the industry and figure out what I wanted to do.” That same year, Chisari’s husband would retire from his 25-year career with the Orlando (Florida) Police Department, and they planned to move to a farm in Tennessee with their young son. Maybe Tennessee would be the right place to start a new business as well.
Chisari had a penchant for claims handling, and she was passionate about discovering call management services and solutions that could improve customer service and job efficiency for the first-notice-of-loss (FNOL) industry. Those interests led her to consider starting her own claims reporting business.
“I always thought that first notice of loss was a very important part of the claims process,” Chisari said, “and I didn't think a lot of emphasis was being put on first notice of loss outside of the worker’s comp industry. So, I decided to go to Birmingham, Alabama, to buy the software to do first-notice-of-loss [reports].
“A gentleman was trying to teach me how to load the software,” Chisari continued, “when they got a call from a company called Georgia Casualty out of Atlanta looking for a first-notice-of-loss company, and the gentleman says, ‘Here she is.’ I was taking their calls 24/7 the next day on my cellphone.”
In March 1999, with a couple of telephone lines, Chisari started Quality Resource Management (QRM) in the living room of their home and the company grew by word
of mouth.
“By the end of the year, I had five phone lines in my house with different ringtones so I coulddetermine which client was calling in on which line,” Chisari said. “After the first year, we obtained an office suite and [the business] just started taking off from there.”
QRM, Inc., partnered with regional companies that were either carriers, third-party administrators or self-insured employers. The company also partnered with vendors serving the industry, such as independent adjusters and nurse case managers — vendors that also needed 24/7 dispatch and notification services — effectively providing triage or exposure controls based on the severity of an incident.
“We became known as the 911 of the casualty business,” Chisari said. "Our whole focus was to control the ultimate loss on the claim.”
Twenty Years Later …
Not long after QRM, Inc., celebrated its 20th anniversary in March 2019, Chisari started thinking about her next strategic move for the company, how and whether she should diversify her service offerings, and how she could preserve her legacy at QRM, Inc.
Around the same time, Cortney Sells, president of The Firm, learned that the insurance claims industry was experiencing spectacular growth. Always on the lookout for opportunities to match up business owners, Sells reached out to owners of leading insurance claims services providers to see if any were preparing for retirement, planning an exit strategy or looking to expand their businesses.
“When I talked to Nita, she was adamant that she was not ready to retire or sell her business,” Sells said. “She wasn’t sure she was prepared to buy out a competitor, either. But she did ask about what options she might have for expanding her service offerings.
“I had an idea,” Sells continued, “I wasn’t sure whether Nita would be interested, but I knew that if she liked it, we were going to do something groundbreaking for M&As. So, I said, ‘Nita, what would you think about forming a strategic, symbiotic partnership with a company that complements yours and has the services you’ve been talking about wanting to add?’”
Chisari was interested and engaged in an agreement with The Firm.
Sells started calling The Firm’s qualified contacts. While speaking with Jonathan Ratliff, owner of Collateral Holdings, LLC in Tuscaloosa, Alabama, she heard him saying a lot of the same things Chisari had said. He wasn’t looking to sell his business or acquire a competitor. But, like Chisari, he suspected he could be doing more to diversify his business and enhance his service offerings.
“I said, ‘Jonathan, I have someone I think you need to meet,’” Sells said. “I told him I represented the owner of another family-owned business who was looking for a strategic partner that could help her diversify her service offerings, and I thought they could help each other.”
Ratliff said that was something he’d really like to hear more about.
A New Type of Deal
“Not all acquisitions are black and white,” Sells said. “There can be hybrid deals. As with this partnership, two family-owned companies can work together to grow without giving up their family’s legacy. The biggest takeaway is that you can have partnership contracts with our giving away the farm, so both companies prosper for the next 20 years. You can hold on to your company’s integrity and stay involved.”
By engaging in a strategic partnership with Ratliff, QRM, Inc., makes it possible for adjusters to look at completed claims, which they can adjudicate and manage in a one-touch manner.
With the strategic partnership, Chisari can offer pricing that’s beneficial to QRM, Inc., clients because of the business they do with Ratliff's company, and QRM, Inc., receives a volume discount.
“Our goal is not to integrate the companies,” Chisari continued. “See, everybody, when they acquire stuff, they think of integration. That is not us. We are remaining our own brands but leveraging and working together to bring new ideas [into the] space we’re operating in. We're looking at things that each company does well and saying, ‘OK, how do we fit? What could we add, should a client desire this? How would we work together to deliver that type of cohesive service?’ So, we're taking the best of both worlds.”
When business owners first decide to look for a strategic partner, they should outline what they’re trying to accomplish. Chisari recommends also defining the managerial weaknesses.
“I recognized that I had grown the company,” she said. “I had brought the company to a point where I needed to look at the landscape of the industry, understand the changes, and then scrutinize my strengths and weaknesses as a CEO and decide how I was going to respond to those weaknesses."
Although she describes the formation of a strategic partnership as “a journey,” Chisari said it was a positive experience because she, Ratliff and Sells all worked together to make it happen.
The challenges, I don't know if I would really call them challenges because Cortney's staff did such a good job in vetting and bringing to me partners they thought would fit the model I was looking for,” Chisari said. “They actually brought me companies that really would be good partners for QRM. So, they didn't waste my time.
“I think the challenge with anything is trying to work out a contract that really emphasizes partnership, my ongoing involvement, their ongoing involvement, how we were going to work together to enhance each other's offering,” Chisari continued. “It really worked through those dynamics purely on a high-level basis. By analyzing and spending time understanding each other's capabilities, and visiting each other's locations, we were able to work through those questions and get concepts for
future products.”
Chisari said that the most difficult part of the deal was working through a roadmap of how she and Ratliff would work together to bring those enhanced products to market while still preserving their individual brands.
“We were not going to find a strategy that would put any changes to current workflows,” Chisari said, “because we were already great-performing companies and administering the core services that we already had. But looking at what could we add on to those core services and putting together those roadmaps — that was really the biggest obstacle.” Sells offered some additional advice to business owners seeking out strategic partnerships:
“Visit each other’s locations and spend time analyzing how to build a roadmap to work together to enhance products while maintaining your individual brands,” she said. “Put together a shared business plan with shared goals and a
good roadmap.”
Chisari also had one last piece of advice for entrepreneurs considering a strategic partnership or other type of hybrid deal. “I just want young entrepreneurs to not look at acquisition like people have always looked at it,” she said. “Yes, there was money exchanged, but it's different; it's more of a hybrid agreement because we share so many common philosophies. It's really the best thing. Even better than the monetary gain, it's the ability to partner with a company that you share so much heart with. I don't know how to explain it.”
Don’t You Love a Happy Ending?
“I'm very pleased at the agreement and the contract, the contract terms, the selling price,”
Chisari said of her experience working with The Firm. “[It was] everything that I wanted, Jonathan felt like he came out with a big company. I've already made a sale for the new company. He goes, ‘Nita, working with you is a hoot!" We've got a good relationship. And I just couldn't say more about Cortney and her staff. They have been wonderful.”
Chisari also said that she and Ratliff remain in close communication with one another, and they communicate frequently with their direct reports to ensure that each company’s culture continues to develop in positive ways.
“I think one thing that played very well in QRM's favor was that they’re a lot larger than the company they’ve partnered with,” Sells said. “QRM has such a strong positive culture, and Ratliff really admired that.” In fact, he plans to enhance his company’s culture with many of the employee programs that QRM, Inc., has implemented, well-positioning his company on the employee side as he and Chisari move forward.
“My legacy hope for my company has not changed,” Chisari continued. “I feel that I put my company in a great position for its legacy. I still work in the company...I've got more tools to help pursue the legacy of my company...I think 20 years of experience in understanding the needs of my clients has allowed me to put that knowledge to work. I think we found the best partner, and I'm excited about our future.”