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Top producers now majority shareholders

Firm changes hands…sort of

JACKSON — Two years ago, Wirt Yerger Jr. toyed with the idea of internal perpetuation by allowing some of the insurance firm’s major producers to buy in.

But when he posed the general question — Would the group be interested in ownership? — interest piqued, but the process stalled because some of the younger producers did not feel it was feasible.

In May 2000, Yerger and company exec Eason Leake attended a seminar in Atlanta, which focused on the challenges and benefits of perpetuation, whether it was perpetuated internally or through a sale to an outside broker or bank.

“It is so difficult to internally perpetuate an agency because outside brokers or banks can offer big money,” said Leake. “Wirt looked at outside brokers, and in fact had two brokerage offers on the table. But the more he looked, the more he realized we had a good thing going, and all this supposed expertise was something we didn’t even need because we already had such good people and resources. Also, as we went through the exercise of looking at the alternatives available in the public marketplace, staying private looked better. In the final analysis, everybody realized there were huge advantages for the ongoing group of Ross & Yerger employees being owners rather than selling out to a larger company.”

Yerger said, “We were on the diving board with an offer from a major brokerage firm when the employees did a complete turnaround and started talking specifics about how they could buy the agency.”

“Consultants gave us differing scenarios,” he said. “We knew the timing was right with interest rates being so low. We developed a plan that made sense so ownership was spread to employees based upon their value to the agency.”

Earlier this month, the company’s employees purchased the 142-year-old agency from the Yerger family. The firm’s legal name was changed from Ross & Yerger Inc. to Ross & Yerger Insurance Inc. Financial terms of the deal, with a retroactive date of Jan. 1, 2002, were not disclosed. Wirt Yerger Jr. will remain as a broker, consultant and chairman emeritus. Current management will remain unchanged, with Eason Leake serving as president and accepting the additional duties as chairman of the board.

Ross & Yerger was originally established by D.N. Barrows in 1860, and was subsequently bought by Edward Yerger and James B. Ross in 1892.

Today, the company is a full-service brokerage firm with offices in Jackson and Tupelo specializing in commercial property and casualty, employee benefits, risk management and employee benefit consulting, personal lines and life insurance. Ross & Yerger Insurance Inc. is one of the largest Mississippi-based insurance firm with clients also in Alabama, Louisiana and Tennessee.

“No insurance firm has been more blessed with such truly outstanding clientele and incredibly talented and professional staff as we have at Ross & Yerger,” said Yerger. “Our success has been driven by our team and made possible by our clients through the years, and I am confident that the new ownership will continue to build and strengthen our firm.”

Majority stockholders in the buyer’s group include Leake, Scott Bingham, Tony Buchanan, David Carlisle, Vivian Farris, Joey Hutto, Greg Maloney, Paul Mize, Amy Smith, Dudley Wooley and Frank Yerger. Another 14 employees bought company shares. The firm employs 52.

“The biggest challenges of putting the deal together were reaching an equilibrium price and then offering employees ownership that was closely tied to current contributions to the agency’s performance,” said Leake. “Clearly, Wirt wanted Ross & Yerger to remain Mississippi-based and -owned. In all fairness, he couldn’t give it to us, so reaching that equilibrium price was naturally a difficult deal.

“After we reached a price that we determined to be fair, the next question was, could the employees afford it? We were working with a diverse group of people of varying ages and at different career stages. It was financially challenging for some young people who were very strong contributors to the firm. We didn’t want to put undue pressure on an employee who had an opportunity to buy the stock, but there was a fine line on how hard to cheerlead.”

At 27, Amy W. Smith, manager of the property/casualty area, focusing on commercial lines and personal surety, became the youngest majority shareholder.

“This is a wonderful opportunity that I don’t think I could have gotten elsewhere so soon,” said Smith, a Florida native who was recently married. “My husband and I talked at length about making the commitment so early in our marriage to settle down in Mississippi, but we’re happy with the decision.”

Smith said neither age nor gender were factors in the decision to join the buyer’s group.

“At Ross & Yerger, if you do the job well, it doesn’t matter if you’re male or female, or 20 or 70 years old,” said Smith.

The acquisition holds a special importance for majority shareholder Joey Hutto, who sold his Tupelo insurance practice to Ross & Yerger nearly a dozen years ago.

“The opportunity to buy back the business is very exciting,” said Hutto. “The agency has grown over the last 10 years and is producer-driven with a really good management team and capable and talented producers. Eason, who has a great ability to communicate with people and is a very good producer, was one of the attractions to the deal. We’re grateful that we had a partner and boss, Wirt Yerger, who would allow us to buy the agency because he certainly could have gotten a lot more money. He wanted to perpetuate what his grandfather started and his son is still a part of the agency. It’s a great opportunity for the future.”

Leake alleviated concerns that the deal involved cost-cutting measures.

“People have asked, ‘Is this something you’re doing to cut costs? Will you eliminate people? Will this impact the operation in Tupelo?’ The answer is no. We’re growing. We’ve been adding people lately. Our focus is on top-line revenue growth. This is not about corporate America eliminating 10% of the jobs,” he said.

Current sponsorship programs, such as underwriting programs for Public Broadcasting In Mississippi Inc., will not change. “We’ll continue to support those efforts,” Leake said.

Leake said the transaction differed from last month’s merger of 12 of the state’s oldest insurance agencies to form SouthGroup Insurance and Financial Services, now the largest private-owned insurance agency in Mississippi.

“In that transaction, a significant number of agencies throughout the state decided to join together and keep the local flavor in their communities while centralizing marketing and operations,” he said. “In our situation, we’re already centralized. We’re not trying to put anything together. We’re perpetuating what’s already there.”

Short-term, internal changes will be indistinguishable to customers because the same employees and same management group have been retained, Leake said.

“There’s an intangible they’ll notice,” he said. “Obviously, being employee-owned, we’ll be even more driven to provide customer-focused service. Day to day, nothing’s changed. Long term, we’ll work extremely hard for ourselves.”

Support from clients and the business community has been “astounding,” Leake said.

“When everybody you talk to says, ‘Get the deal done. We want you to stay local and independent,’ that makes you feel great,” he said.

Rick Hale, president and CEO of Blue Cross & Blue Shield of Mississippi, said Ross & Yerg
er, one of the its largest providers of employee
benefits, has a “long and valued business relationship with our company.”

“I am very supportive of their new business structure and have every confidence that they will continue to be successful in meeting the needs of their clients,” he said.

Ross & Yerger CFO Vivian Farris said, “We’re excited about the opportuni

About Lynne W. Jeter

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