7 Acquisition Brokers Who Can Help You Sell or Buy An Agency
Insurance agency owners who are thinking about selling their businesses have some very good reasons to use an agency acquisition brokerage. Those who decide to get expert help will find several excellent firms to choose from.
General Insurance Brokerage, a leading mergers and acquisitions firm with offices in Florida, Texas and North Carolina, uses innovative approaches to negotiating sale prices for agencies. By focusing on multiples of selling agencies’ free cash flow, rather than the traditional focus on commission, the firm has obtained above-average selling prices. While typical commission-based prices have fetched two to two-and-a-half times commissions for the previous 12 months, the firm negotiated a price of three times commissions for a South Florida agency, delivering the seller an extra million dollars.
General Insurance Brokerage does not charge fees to selling agencies. With many years of experience, the firm works on more than 100 agency sales each year throughout the U.S. They work with agencies of all sizes in all locations.
California-based MKL Acquisitions has concluded more than $100 million in transactions in its 30 years in business. They help agencies all over the country find buyers and sellers while maintaining strict confidentiality. Their website offers tools for estimating the values of agencies and books of business, plus a calculator for estimating the cost of leasing equipment and a business loan calculator.
MKL focuses on independent property-casualty agencies and books of business but does not handle captive agencies. They also handle health-related books of business. One agency seller told them the price he got was 25 percent higher than he thought was realistic. Another credited the firm with helping him weed out “unqualified prospects and tire kickers” so that he could find the right buyer.
Springtree Group is headquartered in Texas, focusing on the sale of agencies with annual commission and fee levels of $5 million or less, a market larger M&A firms ignore. Established in 1988, they work with businesses in the U.S. and Canada, providing M&A full services to buyers and sellers and transaction financing. Agencies in this size range often do not have access to the funding sources available to larger agencies. STG does not try to be all things to everyone, says CEO Sam Patterson; rather, it focuses on a specific, underserved market segment.
Agency Brokerage Consultants assists a variety of insurance distributors, including retail agencies, wholesale brokerages, managing general agents, program administrators, and others around the country. They determine agency valuations, negotiate deals, perform due diligence for buyers, and arrange financing. While they do not limit the size of agencies they work with, they do prequalify agencies before agreeing to work with them to ensure that the agency fits well with their firm and presents a reasonable chance for a successful transaction.
Merger & Acquisition Services, with offices in the U.S., the Caribbean region and Europe, is a boutique investment banking firm serving the insurance industry. They work with carriers and agencies. Through their registered broker-dealer, they offer customized financing for agencies of all sizes. They work with agencies of all sizes and types, but they do best with agencies that have earnings before interest, taxes, depreciation and amortization greater than $250,000.
Optimum Performance Solutions offers a range of agency consulting services, including M&A, valuations, and perpetuation for agencies. Jon Persky is the author of three books on agency perpetuation, has been the exclusive lecturer for the National Alliance for Insurance Education and Research on perpetuation for more than 20 years, and is an expert in minimizing taxes for agency sellers. They focus primarily on independent P-C agencies with at least $200,000 in annual commissions.
Ace Business Brokers represents sellers and buyers in California. It recently sold a 64-account book of construction business, a chain of auto insurance agencies, and an agency that specializes in non-standard auto business. They assist with developing due diligence material, pre-qualifying potential buyers, drafting the agreements, and keeping the process on track.
The sale or purchase of an insurance agency is one of the largest transactions the principals involved will ever make. Most will find that working with one of these firms will help make that transaction a profitable one for buyers and sellers alike.
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