A North Texas-based insurance agency that operates nationally via a dual corporate/franchise model is planning on expanding following its April 27 initial public offering (IPO).
Goosehead Insurance, headquartered in Westlake, Texas, raised $85 million with the IPO, selling 8.5 million shares of Class A common stock priced at $10. It trades on the Nasdaq exchange under the symbol, GSHD.
Goosehead was created in 2003 under the TWG Insurance brand by Robyn Jones. Her husband, former Bain Consulting executive and agency co-founder, Mark Jones, serves as chairman and CEO. TWG added the franchise unit in 2012 and the agency consolidated both operations under the Goosehead name in 2014.
The company offers personal lines and small commercial lines of insurance, with personal lines representing 98 percent of its business.
Goosehead President and Chief Operating Officer Michael Colby told Insurance Journal the company is excited about its prospects and that the IPO “is not the end of anything but the beginning of a new chapter in the organization.”
The agency has been on an aggressive growth trend and expects to continue that trajectory. “We’re going to continue to grow. We’ve got a great marketing opportunity, we’ve got a great team of people. The business model resonates in Texas, in California, in Florida and across the country. We’re going to continue to expand our footprint. Right now, our focus is in our core markets — in California, Florida, Texas, Illinois. Over the next several years, we’ll be expanding in the Midwest, Northeast and the Mid-Atlantic region. We’re very excited about the future,” Colby said.
Goosehead grew by 36 percent between 2016 and 2017, generating revenue of $31.5 million in 2016 and $42.7 million in 2017, according to documents filed with the Securities and Exchange Commission. For the year ended Dec. 31, 2017, net income was $8.7 million.
Organizationally, the company separates sales and marketing activities from service center operations with the goal of achieving greater efficiency.
“We have our sales agents focus specifically on new sales and marketing. We have our service agents focus on everything that needs to be done after the initial issuance of a policy,” Colby said.
At the end of first quarter 2018, Goosehead had 120 sales personnel working out of six sales offices in Texas and one in Chicago, Illinois. Around 130 people are employed by two services centers — one located in Goosehead’s headquarters, and one in Las Vegas, Nevada, Colby said.
On the franchise side, Goosehead has 292 franchises in 21 states; an additional 119 franchises are set to open this year.
Colby said the company’s rapid growth has enabled Goosehead to attract “the best and the brightest in the industry onto our platform. We had over 215 new franchise contracts signed in 2017. And we expect that growth trend to continue into the future.”
The franchises operate under the Goosehead brand, Colby said. The goal for franchisees is to build their business and grow their team, but “we want them to grow responsibly. So, we really do encourage them to come into the company, learn our systems, learn our products, marketing approach. … And we want them to be generating cash flow that they can reinvest in their business,” building out their team and bringing in new talent.
Work on the IPO took the better part of the year, Colby said. The impetus for it was the desire to give people within the organization on both the franchise side and the corporate side a way to invest in the company.
“We want to provide an opportunity for a broader set of people in the organization to participate in ownership. That was really the driving factor. We want them to participate in ownership and have that alignment,” Colby said.
In addition to Mark Jones and Michael Colby, Goosehead’s management team includes Chief Financial Officer Mark Colby and General Counsel Ryan Langston.
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