Producer Perpetuation Planning 

The Independent Agency 

Many older principals are selling to large aggregators or private equity, taking advantage of the attractive multiples the big brokerages and private equity firms offer. The decision to sell your agency can be stressful and overwhelming.  

Young agents like the independent agency system and what it offers and want to buy one or start their own agency. In the independent agency space, young producers are eager to take over from owners retiring. Lenders see young producers entering their own and acquiring firms.  

The Next Generation of Agency Owners 

Younger agents do understand the value of building a book of business.  

They accept the current model but want to creatively implement new technology and innovative opportunities to grow the business. 

The independent agency system remains vital. Utilizing new forms of marketing, the latest digital technology, and communicating with clients using mobile and virtual meetings. The cash flow from renewals provides the capital they need to grow and expand the business. 

The demand for financing to acquire new businesses, expand agencies and develop producers is increasing. Young agents want to acquire books of business and become partial or full owners of an agency. They know how to run a business and manage and develop teams efficiently—being comfortable with new technology and making the tough decisions to grow an agency. 

Young agents in their thirties and forties have been at the agency they’d like to acquire for 10–12 years. They are working their way up in the agency, taking on more management responsibility. They have the ambition, drive, and smarts to run an agency. Some seasoned producers have built a profitable book of business for their agencies. The question is, “Have you spoken with the Owner and expressed interest in a conversation on agency ownership?” Here are five key Reality Checks to Ensure You’re Ready for Agency Ownership. 

Many of these owners would prefer to keep their agency within the family or perpetuate it to someone internally. They want to leave a legacy to their staff and the communities they serve. Older agency owners are working with younger producers to prepare them for ownership and possibly provide seller financing. 

Having a perpetuation plan is the key to business continuity. In all successful transitions, an owner has a plan for how they want to pass on the agency. That’s why owners need meaningful conversations with their employees, so everyone knows how the agency will be perpetuated.  

Your agency is your biggest asset and may even represent your life’s work. It needs to be protected. The best way to do that is to have a thoughtful plan for the future. 

IA Valuations with Ohio Insurance Agents have resources and expertise available to help you every step of the way as you build the plan that is right for your agency. This is one of the many resources we have built to help our agents continue flourishing. The team is excited about your future and wants to be a part of giving you as many options as possible as you plan for the future of your agency. 

Generally, young agents need the assets to acquire an agency, so financing is essential. A bank may fund part of the sale, with the owner financing the rest. The owner may give the agent shares in the organization as compensation, reducing the amount the new owner will have to borrow. 

Over time, more owners are selling their agencies, providing a plus for all parties. It allows the older owner to reap the benefits of a partial sale but still retain control of the firm and potentially earn more when the rest is sold. 

It gives the new owner partial ownership and an incentive to help grow the agency during the transition. 

Retiring principals can help this next generation of owners realize the dream of agency ownership. Older owners that recruit younger agents into their agency will be better able to identify and mentor a successor. Young agents who make their interest known and have worked hard are well-positioned to succeed. 

You Want to Be an Owner?  

Starting an agency or acquiring an existing one, we have education, resources, and scholarship opportunities to help you prepare for ownership and beyond! You can download or review it online at OIA Ohio Insurance Agents Business Consulting. 

Young agents are the future of the independent agency system! 


Cited Resource

IA Magazine October8th, 2019

5 key Reality Checks to Ensure You’re Ready for Agency Ownership.

Cited Resource 

Ohio Insurance Agents  IA Valuation 

Cited Resource 

IIABA Selling an Insurance Agency 

Cited Resource 

OIA Ohio Insurance Agents Association 

education  resources  scholarship 

OIA Ohio Insurance Agents Business Consulting 

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