Now is a Great Time to Buy an Insurance Agency

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Insurance agency legacy planning can be very involved, even when passing the business to a family memberAs the saying goes, “Timing is everything.” That definitely holds true when it comes to making any significant decisions or transitions in your life, including large purchases, job changes and moving to a new area. For those of you who are thinking about entrepreneurship via purchasing an insurance agency, naturally you must give many factors some serious consideration.

One thing is certain: you’ve picked a great time to make such a decision. Over the next decade, approximately 75% of all insurance agencies will transition ownership. The main cause for such a high turnover rate is that the current average age of agency owners in the United States is 59. Because of this, we will see more and more insurance agencies for sale as their owners look toward their retirement.

Most agency owners may make their way into retirement through insurance agency mergers, perpetuation, book sales, buyouts and sale of their agency. This is fantastic news for younger agents who are now looking toward their own future. With the right experience and business knowledge, you could own your own insurance agency in the very near future.

Although you may find a number of opportunities to buy a privately owned insurance agency over the next few years, that doesn’t mean that the process itself is without any challenges. In particular, financing your purchase may present a considerable hurdle.

In general, insurance agencies don’t have many hard assets that they can borrow against. In turn, this means that traditional banks do not like to grant loans to agents looking to purchase their own agency. The risk is higher than the potential return on investment for most banks.

Luckily, there are options available to you if you are one of those agents who would like to take advantage of the high agency turnover rate currently taking place. One such option is to work directly with a company that specializes in helping entrepreneurs get started.

Springtree Group presents you with a solid list of lenders who have experience working with and lending to clients looking to purchase an insurance agency. We also offer a full spectrum of services to agency sellers, so that the transfer of their agency can be kept confidential.

Confidentiality is extremely important in the insurance agency industry. It is crucial that customers, employees and competitors aren’t made aware of an agency sale, so that everything remains status quo. Springtree Group’s lenders also give agency sellers a guarantee that their potential buyer is financially qualified and able to obtain the proper loan in order to make the purchase. This ensures that the transfer of the insurance agency does not drag on interminably, which may ultimately lead to the undesirable loss of confidentiality.

Now is the ideal time to check out insurance agencies for sale in your desired geographic area and make your move from insurance agent to agency owner. You can rest assured that insurance agency financing can be secured when you work with a business broker like Springtree Group, with powerful lending connections in the insurance industry.

The blog links here below represent a small sampling of the numerous listings for Texas-based insurance agencies currently available as well as some helpful information regarding buying and selling agencies. For more information, please contact Springtree Group at 972.395.8811. We look forward to working with you.

Mistakes to Avoid When Buying an Insurance Agency

There is undoubtedly strong competition when it comes to purchasing an insurance agency in today’s market. It’s fair to say that insurance agency transactions are among the most competitive industries for small business acquisitions. With that being said, if you are looking to acquire one of the independent insurance agencies for sale, what may seem like trivial errors in the insurance agency acquisition process can increase the odds of your deal going through. A few prevalent mistakes to avoid include:

  • Taking a far too laid-back approach – As you know, you have a significant amount of competition nipping at your heels for every potential agency that bleeps onto your radar. Moving too slowly or working to find the right opportunity only part time will cause you to miss out on making the right connections. An aggressive market calls for an aggressive attitude and a consistent effort if you want the end result to be in your favor.
  • Having unrealistic expectations – To go into the insurance agency search with an inflated idea of what you can actually afford is to proceed blindly. You simply must have a solid grasp on how much money you have free to put toward the acquisition. Aside from having enough capital to make a down payment, be sure that you can afford to actually run the agency once it’s yours! It’s also imperative that you know your borrowing capabilities (i.e., how much you will qualify when it comes time to take out an insurance agency loan).
  • Showing your hand too early – During the acquisition process, you will at some point enter what is known as the disclosure phase. As you find yourself in the disclosure phase, you and the agency’s current owner will naturally disclose some necessary information about yourselves and the agency in question. If you begin delving into the due diligence phase here, you will run the risk of causing the seller to look in another direction. While it is necessary to move with caution, applying too much caution can easily cause you to lose what may have been the ultimate deal.
  • Being too rigid – When you do find what appears to be an agency that has what you’re looking for, doing your financial, operational and legal due diligence is crucial. As you complete your due diligence, be sure that you are not letting yourself get stuck on one small point or another. To do so can result in you losing the opportunity, which may very well have been the perfect situation for you. Don’t let the seller walk all over you, and definitely make sure you are getting a fair price, but at the same time be willing to negotiate and compromise.

As you move through the process of acquiring your ideal insurance agency, remember to be aggressive yet flexible, as well as realistic and controlled, in order to land an insurance agency that is the perfect fit.

To discuss your agency needs, please call us at 972.395.8811 or contact us online. We look forward to assisting you in growing your independent agency or brokerage firm.