It is a seller's market for insurance agency sales. Depending on a particular agency, buyer competition may come from licensed agents, other insurance agency owners, regional or national brokerages, and investors such as private equity groups. This makes it very challenging for a given buyer to find a suitable match.
Parties interested in acquiring an agency have four options: (1) wait for an opportunity to come to them, (2) contact insurance agency owners on their own, (3) search the internet for insurance agencies for sale and/or (4) hire a professional intermediary to contact agency owners for them.
Let’s look at these options closer:
1. The odds of a respectable insurance agency falling on your lap are slim to none, particularly in light of the competitive demand.
2. Even if you do find an owner willing to discuss a sale to you (maybe 1 out of 150), all sorts of fears and emotions will come to the surface from both sides as the deal progresses. The owner will be worried about confidentiality breaches, receiving a fair price for the business, and the buyer’s financial capabilities. The buyer will be worried about receiving all pertinent information on the business, a deal falling apart mid-stream and making sure there is a continuity plan post-closing. There is a very large trust gap that has to be bridged and the probability is very low.
3. While the Internet is a great way to see what is available; the odds of actually acquiring an insurance agency found on-line are low. If the owner lists the book of business for sale, then you’ll run into the problems discussed in #2 as well as be competing with dozens of prospective buyers that surf the internet for opportunities. If an intermediary controls the listing, then the process may be smoother but you might be competing with an even higher number of buyers. As an example, our internal buyer database exceeds 4,500 active buyers. The best bet might be to establish a relationship with the intermediary so that they know who you are and what you can afford for future opportunities.
4. At least half of the larger brokerage sale transactions happen with the buyer hiring an intermediary to represent them. You can find validation of this on completed transaction tombstones for most investment banking firms. Serious buyers pay for professional assistance in finding proprietary deals and to have an expert manage the transaction. It costs money up front, but the expense can be minimal in comparison to the cost of the transaction that you are trying to achieve.
Whether we work for the seller or for the buyer, we:
• Collect and organize insurance agency documentation.
• Work to establish realistic expectations on the parties involved.
• Facilitate all communications, meetings, and negotiations between the parties.
• Organize and manage the due diligence phase of the deal.
• Assist in getting the transaction financed (if applicable) and in pushing to get everyone to the closing table.
Acquiring an insurance agency is neither quick nor easy to accomplish. One must have a degree of patience and maintain realistic expectations to navigate his/her way to a successful acquisition. Agency Brokerage Consultants can assist you in making an acquisition in a few ways:
• Join our contact database - Tell us what you are seeking and be the first to receive notice of new insurance agencies coming on the market via email notification. We will even send you a copy of our "Buying an insurance agency" guide.
• Hire us for a buy-side engagement - We contact insurance agency owners, handle the valuation and facilitate the discussions exclusively for you.
• Hire us to consult with you on due diligence and obtaining the best financing for a deal that you are contemplating. We have extensive experience in reviewing agencies and know nearly every lender in the marketplace.