August Felker·August 21, 2023

Buying a Small Business to Build for Decades | August Felker Interview

August Felker is a two-time search fund buyer who has spent his entire career in the insurance brokerage industry. His first acquisition — Murphy's Insurance Group in Waunakee, Wisconsin — was completed via a traditional search fund around 2008-09, buying a roughly $1.7m EBITDA, 50-employee commercial insurance brokerage at approximately 6x EBITDA. He navigated a difficult three-year earnout with the seller, an early departure of a key salesperson (which he resolved by personally visiting every at-risk client), and the challenge of transitioning leadership authentically in a relationship-driven, small-town business. He sold Murphy's in 2015 to Hub International (a PE-backed roll-up) after enjoying significant multiple expansion, then completed a three-year transition earnout with Hub before leaving in 2018. At 38, with four kids and a desire to return to St. Louis, he self-funded the acquisition of CLH Insurance (rebranded Oberley Risk Strategies) in 2019 — a much smaller six-employee, ~$1m revenue agency — with explicit intent to hold it for decades and build an enduring independent brand. Oberley has since grown to 15 employees and carved a profitable niche serving ETA searchers on insurance diligence at deal close. Key lessons include the importance of authentic leadership, the structural challenges of earnout seller dynamics, the steep rise in insurance brokerage multiples from PE consolidation, and the strategic advantages of staying independent in a heavily consolidated market.

Deal facts

multiple: ~6x EBITDA (at time of first purchase, 2008-2009); second deal not stated
sde ebitda: First deal: ~$1.7m EBITDA (50 employees); Second deal: under $500k EBITDA (6 employees, ~$1m revenue)
revenue: Second deal: ~$1m revenue
financing structure: First deal: traditional search fund equity; Second deal: self-funded with senior bank debt from an insurance-affiliated lender (10-year term, no SBA)
notes: Two separate deals: (1) Murphy's Insurance Group, Waunakee WI, bought ~2008-09, sold 2015 to Hub International; (2) CLH Insurance (rebranded Oberley Risk Strategies), St. Louis MO, bought 2019, still operating. First deal had seller note, equity rollover, earnout, and seller as landlord. Second deal was entirely self-funded.

Why this business

August grew up around insurance (his father was in the industry), worked in commercial insurance right out of college in San Francisco, and believed insurance brokerages were ideal search targets due to their highly recurring revenue (~90% client retention), recession-resistance, and his existing industry knowledge. He also wanted the 'son the seller never had' dynamic — someone who would genuinely learn and preserve the business rather than strip it. For the second deal, he explicitly wanted something he could own for 30-40 years and build into a lasting brand, and chose an independent agency in his hometown of St. Louis where he could differentiate as one of the last independents in the market.

What's working

Highly recurring revenue: insurance brokerages retain ~90% of clients annually, making the revenue base predictable and sticky
Recession-resistance: clients cannot afford to drop business insurance even in downturns; the book held up through the 2008-09 financial crisis
Industry expertise compounding: deep knowledge of insurance carriers, appointments, and relationships built over two decades gives a durable competitive edge
Independent positioning: as nearly all St. Louis agencies have been acquired by PE-backed roll-ups, Oberley stands out as one of the last independents, aiding in recruiting and client trust
Niche client base: serving search fund and ETA buyers on insurance diligence has become the primary business line, providing a differentiated referral flywheel
Proactive client retention during transition: August personally visited clients when a key salesperson departed early on, successfully retaining them through relationship-building
Geographic return to hometown (St. Louis) gave personal and family motivation and cultural fit
Self-funded structure provides full autonomy — no investor pressure to sell, enabling a multi-decade hold

What's hard

Elevator-asset risk: an insurance brokerage's only assets are client relationships and employees; if key people leave, revenue can evaporate quickly
Seller transition friction: the three-year earnout with the seller of Murphy's created tension — two people with partially misaligned incentives sharing close quarters, leading to 'two cooks in the kitchen' dynamic
Recruiting great salespeople: true high-performing insurance salespeople are extremely rare (estimated 3-4% of population), making organic growth via new hires very difficult
Buying a job: the second, smaller deal (6 employees) meant August was deeply in the weeds in ways the first larger deal (50 employees) did not require — a shock after running a bigger organization
Early leadership struggles: August felt scripted and inauthentic as a first-time leader, listening to respond rather than to understand, until board feedback helped him correct course
Multiple compression from buyer's perspective: insurance brokerage multiples have risen from ~6x EBITDA in 2008-09 to 10-12x today due to PE roll-up activity, making new acquisitions very hard to pencil out
State-by-state licensing and carrier appointment processes create administrative burden for any new entrant
Loss of traditional search board coaching in self-funded model required proactively building an informal advisory network

Notable quotes

I sold when I felt like I was just getting good as a leader. And you sort of cut that off. You're definitely going to be a better CEO your second decade than your first decade.

I really wanted to set it up where I could own it for 40 years, 30 years and hopefully just really get into something where it keeps growing. I don't sort of interrupt that period where I'm improving.

It's an elevator asset business. There's no hard assets that you buy in this business — all of your assets go up and down the elevator every day. They're the team.

I felt very scripted. I felt like I was sort of running a Playbook that wasn't really me. I was saying things that I'd read in a book or heard before. Learning to be comfortable yourself as a leader is really hard, but once I started doing that and being more me, things started to work a lot better.