Agency acquisition

[Herkster]

Just checking in, has anyone purchased an agency recently, and if so, what is the going rate? The last P&C agency we bought (some small commercial risks, a little crop insurance), we got bought for what I remember to be 1.4x commissions. This was structured over a 3 year payout period, at the retiring agents request.

I'm looking at another acquisition, decently sized book, I'd guess $700k in commissions, made up mostly of P&C, farm insurance, and crop insurance. There is some commercial on the books, but a relatively small percentage. They also have life, health, disability, LTC, and policies such as that to round the accounts out.

Crop insurance is always hit and miss, the government always has proponents to keep it, and on the flip side, there always appear to be some legislation in the works to privatize it/end the government subsidies. That's always the one I struggle to value, as it really could be gone in the blink of an eye (given, I think a private market would start for it, but that might be years down the road).

Any input from the crowd?

 

[Herkster]

Lots of lookers! No opinions?
I think I'd try to structure the crop insurance book a little cheaper than the P&C books, as crop insurance commissions are "capped" by RMA. Premiums vary each year, as do commission percentages. Low crop prices = lower premiums = lower commissions.

 

[InsCommentary]

I'd hire a consultant who has done hundreds and hundreds of deals like this. Otherwise, there's a good chance you're overpaying when buying or leaving money on the table when selling.

 

[Herkster]

I'd hire a consultant who has done hundreds and hundreds of deals like this. Otherwise, there's a good chance you're overpaying when buying or leaving money on the table when selling.

Thanks for the response. I'm kind of in the middle of no where, quite literally. Where would you recommend seeking out such a consultant? Google search comes up blah, any other search ideas?