5 Keys to Successful Perpetuation Planning

The private insurance market has a blind spot. Owners and agents are aging, but fewer than half have a perpetuation plan in place. The following 5 Keys to Successful Perpetuation Planning will help you create a plan that will facilitate an orderly and efficient transition when y­­ou’re ready to hand over the reigns of your agency to a new owner.

Over the years, Springtree Group has facilitated an abundance of insurance agency hand-offs. We’ve noticed clear trends of smooth transitions depending on the level of preparation that exists at the outset.

­While our perpetuation planning recommendations may not reveal anything ground-breaking, we have repeatedly seen these five common-sense points ignored.

1. The Buyer is Not You

While it’s preferable for your successor to share your overall direction and core values for your agency, they aren’t going to be able to become the “new you,” and that’s fine.

Opening and establishing roots for a fledgling business is a different skill set than the one required to sustain a business. Naturally, then, the personality types that are most successful as founders can differ from the types that take over later on.

What’s most important is finding common ground regarding:

  • Customer care
  • Core agency DNA
  • Office management

Springtree Group works as your business intermediary to find the right buyer for your agency; we use a hands-on approach to manage each transition event from start to finish. STG is the leading national firm supporting sellers in need of confidential access to financially qualified buyers.

2. Strengthen Your Financials

 A successful perpetuation plan will rely on your financials being robust. While you will be able to look back on your years of accomplishments with satisfaction and gratitude, your clients and your successor must be able to look ahead and see opportunities for continued success. An agency that is thriving financially will get the best offers when it is time to sell.

3. Carefully Research and Plan Your Strategies

 Your personnel and your processes should be fully established well in advance of the transition for your perpetuation plan to be successful.

We suggest making sure that management feels recognized and personally invested. Success in independent business relies on finding the next generation of motivated managers and entrepreneurs and helping them flourish.

Finalizing your financial strategy is where your process matters most. The transfer of a business carries tax implications and legal considerations. Every choice matters long-term.

Work with your attorney, CPA, and financier as early as you can; they will help develop a strategy that will benefit you and your agency.

4. Create a Strong Chain of Succession

With the average agent’s age nearing 60, a full fourth of the workforce could be retiring in the next few years. To offset this and ensure a robust future, agencies must be on the lookout for young talent that will be able to provide a wealth of tech-savvy knowledge.

Remember: Your successor will also need a successor. Have solid picks waiting in the wings.

5. You May Want More Than Your Agency Is Worth

That’s not a reflection on your agency, but rather your love for it. You have spent the prime of your life breathing life into your beloved business, so you see the years of labor reflected around you.

While this is understandable, you’ll need to be savvy about the future of your agency. The years of your life invested so far can’t be assigned a price, but the results yielded can.

To learn more about the available models of business perpetuation funding, or to discuss the sale of your independent insurance agency, email us at service@springtreegroup.com.