Colonnade has studied the F&I Agencies and Payment Plan Provider markets for the last 20+ years. We have worked on nearly 30 M&A transactions on the buy-side and the sell-side. We have gotten to know the industry players and the buyers. We've identified some high-opportunity M&A plays that could help to drive even more value, scale, and customer satisfaction in the industry.
Spotlight on F&I Agencies (1:00)
In this first part of our episode, we answer the following questions:
- Where do F&I agencies sit in the F&I ecosystem? (1:00)
- What does a typical F&I agency look like? (7:00)
- What is going on in terms of M&A and what are the value drivers in the industry? (9:00)
- What is driving M&A transactions right now and what are some potential M&A plays? (12:00)
Where do F&I agencies sit in the F&I ecosystem and what value do they provide? (1:00)
Gina: Between the F&I administrators and the F&I office and the dealership, there are F&I agencies. They are independent agencies with independent agents. They are like insurance agents. They bring together the product administrators and the dealers.
Gina: The agents have deep knowledge about the products they represent. They can train the F&I office on those products and how to sell the products. They also act as the middle man or the interface with the administrator. They are one distribution arm for the administrators, which makes them critical in the ecosystem. They are a valuable component of the overall F&I ecosystem.
Jeff: The F&I agency is a particular point in the value chain. It's a differentiator. Some administrators sell to dealers through a direct sales force, others use F&I agents.
Gina: There are administrators who go direct to dealers, but most administrators also use independent agents. They may have a direct sales force, but they have independent agents also. The only sector where that seems to not always be the case is selling into independent dealerships. You tend to see more direct agents that are employed by the administrators selling into the independent dealerships.
Gina: An important component of what the agents do is help the dealership with reinsurance. Reinsurance is an important component of a dealership owner's profits. For every contract, every F&I product that is sold, there is a reserve set aside for future claims. F&I agents are usually very fluid and educated in talking about reinsurance and making sure that the dealership has the right reinsurance programs. So they deal with reinsurance, the