Perpetuation Planning: It’s About Time

Over the past five years, IA Valuations has completed hundreds of independent agency valuations. Agency principals get valuations for several reasons: business planning, internal perpetuation, external sale, or out of curiosity. To complete a valuation, we collect a large amount of data from each agency, including financial statements, production reports, employee data, and other key metrics that inform our final analysis. When aggregated, this data can provide some unique insights into the current state of the independent agency plan.

One thing we would like to learn from each agency is whether they have a formal written perpetuation plan. We have discovered the agencies that have these plans are often valued higher than their peers who do not have one. And there are many reasons for this.  Agencies that create, revisit, and execute a plan, are generally doing the things that will increase their value over time. They are running their agencies like a business instead of a lifestyle. They are hiring and mentoring next-generation talent, with an eye on finding future owners to take over the agency. They are using state-of-the-art technology to find efficiency and enhance margins. And, lastly, they are thoughtfully planning how to transfer the agency leadership, ownership, and book of business in a way that will ensure retention and take care of their long-time customers.

The data we examined shows that only 31.0% of all agencies had a formal written perpetuation plan. When we broke the data out by age bands, we found the following:

The agencies with the youngest owners, had the highest percentage with perpetuation plans. This is encouraging, as these agency owners have the longest runways to make the changes that will enhance the value of their asset over time. By planning and executing in such a manner, these agencies will have multiple ways to realize their value when they are ready to exit. The long runway will give them the option of internal perpetuation, as they will have the time to hire and train the future owners. If an external sale is the goal, building the value over time will ensure a great return.

In contrast, for most of the agency principals that are closest to retirement, they have no plan to follow. For older agency owners who have not planned, they will have fewer viable options, and may not realize the full potential value of their agency. If they start to look for next generation buyers too late, they will run out of time. If they look to sell, they may sell below the market price, as they have not created a plan that helps them to focus on investing in the things that impact value over time.

Increasing agency value over time takes dedication and commitment. It’s easy to get bogged down in the day-to-day of running an agency, but we encourage agency owners to set time aside to map out the future plans and ensure that all the key players commit to the vision.  Creating and executing a detailed perpetuation plan and revisiting it often will help focus the agency on the drivers of value.

Perpetuation planning. It’s about time.

If you are ready to rise above the day-to-day, reach out to our team of seasoned professionals to receive a fair-market valuation of your agency. Learn more at or email us at

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