Perpetuate Your Agency Through An Acquisition By A Bank
By Gerald C. Vigneron
Some agents sell their agencies to fund their retirement. Theyve toiled for decades to build a strong, vibrant organization and want to take their equity out while having the agency continue to thrive under the new owners.
But many sellers arent retiring. They believe that to take their company to the next level, they need to partner with a bigger organization that can afford to invest in marketing, support staff, producers and technology.
Whether youre planning to spend your later years golfing in Florida or working hard as ever, selling your agency is an involved process. Youll want to make your agency as attractive as possible to potential buyers, such as a community banks, so you can get a fair price and attract a high-quality, financially sound bank as buyer.
A savvy banker will hire an expert consultant to evaluate your agency before making an offer. The consultant will listen when you say you have a well-run, thriving agency but will need detailed written proof, too.
Many agents dont have all their business records in one readily accessible place. When asked for a document they say, "Ill have to look for it," "Ill have to get it from my accountant," "I think that information is at my home" or "Weve never tracked that." This doesnt make a good impression.
If youre planning on selling, get your paperwork together before talking to the banker or consultant. To put your best foot forward, assemble the following documents:
A brief history of your agency, including any acquisitions youve made and a description of your office automation.
Well-organized, up-to-date financial records that document the growth and profitability of your agency. These should include your agencys federal tax returns for the last 3 years, a balance sheet prepared by an accountant and W-2s and 1099 forms for all employees and independent contractors.
Production reports and market information. How much premium did your agency bring in from individual life and health insurance, employee benefits, financial products and personal and commercial property-casualty insurance? Do you have a niche market? How much premium did you place with each of your top companies? Is the business you produce profitable for your company? Does your agency accept business brokered by other agents? If so, how much?
