Agency perpetuation plan: How to maximize the value of your agency?

You have built a successful agency and are now looking forward to retirement. What’s your strategy for the exit? What do you need to start thinking about today when you plan your business transition?

The absence of a good perpetuation plan can not only affect the value of an agency and your retirement date, but also the ability to finance such a transaction.

One way is to grow your agency’s book of business, including growing both through acquisition and organically. A valuable agency can not only grow organically, but also grow by making strategic acquisitions and successfully incorporating them.

It is never too late to do something positive today to improve your agency’s value. Here are some of the ways you can help you work on agency perpetuation plan while simultaneously increasing the value of your agency.

Agency perpetuation plan: How to improve the value of your agency?

Agency perpetuation plan


1. Find a successor with varied skills

Your successor should share your values and priorities for the company, but he or she must not be a ” mini-me. ”

Many agents complain that they can not find a junior partner who will work as hard as they can or even, produce the way they do. But why should the new principal be like you? The company was established and must now be maintained— two goals that require different skills. With a harmonious attitude towards customer service, Agency DNA, office management and demeanor are needed to retain current customers and employees. However, you will never find your exact match, and this may not even be the best idea for the business.


Did you grow as a business owner? So will your successor. Feel confident in your successor’s ability to run and build the agency. Ideally, this person will take on some responsibility for the acquisition of customers, carrier relationships and retention of business long before the transition ends. A transition is a great change; your customers will be on alert. The more comfortable you are with your successor the more confident they will be.

2. Maintain strong Financials

This is a perpetuation plan, not a rescue. You may feel satisfied by looking back on your accomplishments, but your successor must look forward and find an opportunity to pursue. A well-managed, profitable and growing agency offers good momentum and qualifies for better financing. Strong financial contributions also lead to a stronger assessment. When evaluating an agency, nothing is more important than growth–both in total revenue and profitability. Not only does growth counteract the natural attrition of clients but it also provides a future for the staff who can advance and take on additional responsibility. Growth motivates everyone, especially your successor.

3. Think Through and Research Your Strategy

Identify potential successors long before it is necessary so that you are able to train, encourage, and share responsibility. Your junior producer is likely more eager to take over than you realize, so communicate your plans clearly and stick to them.

In order to build a sustainable business, you must always think of the next generation. Consult your financial consultants before the plan is finalized. The transfer of a company has tax implications and legal considerations, and your choices, such as whether to choose an asset sale or a stock exchange, play an important role in how much you keep. Engage your CPA, lawyer and financial institution early in developing a strategy.

4. Maintaining a chain of talent

Research indicates that agencies should hire three young producers for every producer currently employed to cover this loss of retiring of experienced producers This includes both young employees and senior staff with the ultimate goal of building an uninterrupted chain of talent. This wealth of talent makes your life plans robust and gives young, tech- savvy agents the opportunity to work with new clients.

Young agents can learn to produce by reaching out to prospects of their generation, which means a wider target market for the company. This future- and growth-oriented approach will make your agency more valuable and the transition to new ownership more stable. After all, your successor will need a successor too.

5. Be Realistic about your Agency’s worth

If you are the founder of your agency, you have probably poured your soul into it. You see the company as the achievement of your life and you want to be rewarded for success. This is understandable, but your demands may not be realistic. Instead of looking at your past, everyone who buys the agency will think of its future. Your agency’s valuation will be based on revenue, profit, growth rate, retention, quality of carrier appointments, demographics of customers and other economic and immaterial considerations. Every night you worked late doesn’t count — only their results do. So it would be good to be realistic about the value of your company.

6. Let go when it’s time

Develop and discuss a strategy for the transition with your successor and employees. This ensures that responsibilities are properly transferred. If a principal intends to leave the agency, a written and executable transition plan with benchmarks for the transaction must be created. A written plan focuses attention and the distribution motivates the spirit— both buyer and seller need skin in the game.


As you probably have an internal successor, the new principal probably knows the carriers and customers. However, you might need to plan certain customer meetings to explain the transition and share the strengths of the new owner. Include your successor in communication and visits with your carrier. Your carriers are as interested in the future of your agency as are your customers. Make sure you are comfortable with managing the future.

Bear in mind that, eventually, you need to let go. Complete the transition and take your hands off the wheel. It’s the new owner’s turn now.

Take steps today to maximize your agency’s value for the future, and to ensure that you have attractive alternatives available when you are ready to perpetuate. This can include selling the agency internally to a family member or key employees, or externally to another agency or third party.

The best perpetuation plans are flexible to change, take time and effort to prepare, and allow for the selling generation to achieve its retirement goals while enabling the successor generation to purchase a business with a stable financial footing.

Agency perpetuation plan



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