REDWOOD CITY, Calif.—ABD Insurance & Financial Services Inc. Chief Executive Officer Dan R. Francis resigned last week in an apparent fallout from Wells Fargo & Co.'s acquisition of Greater Bay Bancorp, which was announced only days before.

As part of the $1.5 billion all-stock bank transaction, which is expected to close early in the fourth quarter, Redwood City, Calif.-based insurance broker ABD is to become part of Chicago-based Wells Fargo Insurance Services Inc., formerly known as Acordia Inc.

Speculation had been mounting that Greater Bay, which was rumored to be on the block for some time, would divest ABD on completion of a strategic review of the bank's operations (BI, April 23).

Although brokerage observers say the bank deal makes sense and the addition of ABD will enhance WFIS' upper middle-market and large risk management account presence, a successful integration is not guaranteed.

Details including integration plans or management decisions have yet to be made for the combined brokerage, according to WFIS and Greater Bay, which is fielding inquiries for ABD.

Unlike traditional brokerage deals in which management generally hammers out some integration issues before announcing the transaction as a means to assuage employee anxiety, this deal involves the bank parents and was not sealed independently by the brokerage subsidiaries.

Dave Zuercher, chairman, president and CEO of WFIS, noted in an e-mail response, that although various decisions have yet to be made, "the success of this acquisition won't be determined by how much money can be saved or how many positions can be eliminated. Our success depends on keeping talented people and adding more value, products and services to our customers."

According to Business Insurance's 2006 brokerage rankings, Wells Fargo was the world's fifth-largest broker--and fifth-largest broker of U.S. business--based on $959.4 million in 2005 brokerage revenues. ABD was the 15th-largest broker of U.S. business, based on $165.0 million in 2005 brokerage revenues from U.S. clients (BI, July 17, 2006).

"I look at this like the 'Brady Bunch,"' said Bobby Reagan, president of Atlanta-based Reagan Consulting Inc., referring to the popular 1970s sitcom. "The parents decide to get married and now the kids have to figure out how they can live together."

Whether Mr. Francis' departure is a sign that ABD management does not want to live with its new sibling and is a harbinger of more fallout to come remains to be seen.

No reason was given for his resignation, and attempts to reach Mr. Francis were unsuccessful.

This is not the first time, however, that Mr. Francis has balked at his firm being acquired.

He came to ABD in 1997 by way of Minet Technology Services, which ABD acquired from Aon Corp. shortly after the Chicago-based brokerage acquired the technology broker's parent Minet Group from St. Paul Cos. Inc.

Mr. Francis was very frank that he did not want Minet Technology, which he cofounded in 1987 as Compro Insurance Services and sold to Minet in 1994, to be absorbed in the mass consolidation occurring at that time with the world's largest brokers, and specifically sought out ABD.

After serving as managing director of ABD's technology service practice, he became president of its property/casualty operations and was chief operating officer before becoming president and CEO in December 2005.

In the wake of Mr. Francis' departure, ABD Chairmen Frederick J. de Grosz and Bruce Basso will assume executive leadership of the brokerage "in what is expected to be a very seamless transition," an ABD spokesman said.

WFIS declined to comment about Mr. Francis' departure.

Brokerage observers say WFIS will benefit from the addition of ABD, but note that a successful integration is not a given.

ABD is "a sophisticated resource-driven broker that brings a lot of valuable deliverables" to upper middle-market customers like risk management, loss control and claims administration, said John Wepler, president of Marsh, Berry & Co. Inc. in Willoughby, Ohio. While WFIS provides services for some larger risk management accounts, it historically has served the middle and lower-middle market, he said.

WFIS now will be "more capable of writing a full palate of risks," Mr. Wepler said.

"On paper, ABD would be a great addition to WFIS' platform," agreed Timothy J. Cunningham, a principal with OPTIS Partners L.L.C. in Chicago. "ABD is a great firm with a great reputation, a real presence in the Silicon Valley and throughout the West Coast, with a good benefits practice. So it is certainly a prime acquisition, there's no question about it."

But in situations in which merging brokers have not had the opportunity to work out at least some of the integration details before announcing the deal to employees, the firms may "end up behind the eight ball a little bit," Mr. Cunningham said. "And when you're behind the curve and you haven't thought through some of these issues, it can create a great deal of uncertainty. It can create morale issues particularly among the employees from the firm being acquired."

"One of the keys for success will be for current Wells employees to avoid 'helping' ABD to the extent it changes the character of one of the finest regional brokerages in America," said John Wicher of John Wicher & Associates Inc. in San Francisco.

"The tendency of buyers, particularly their corporate apparatus, is to exert control over the acquired company," Mr. Wicher said.

"This can be viewed by the seller as an assault on the very culture that made them successful. The result is that the key employees begin a countdown to the date they can leave without being sued for breach of their employment agreement. The trick for Wells is not to meddle with the secret sauce, which has made ABD such a great business," Mr. Wicher said.

Indeed, Mr. Reagan said ABD could be in for a "bit of a transition."

ABD has "enjoyed a certain amount of freedom" as part of Greater Bay where it was the bank's insurance operation. "Now they are a smaller part of a big insurance operation," but "the specialized nature of their operation may allow them to continue to enjoy a certain level of independence," he said.