I'm in the early stages of looking at purchasing an agency not far from mine here in Kentucky, about 30 minutes from my current office. I can't figure out what a fair price on the place is. I'm currently waiting on a valuation from the M&A person I've used to contact them and get this far. Here's what I know so far:
Book is roughly a little over $2M in premium
Revenue last couple of years is hovering around 310,000
One very solid company (Auto Owners) filled with a few others like AllState and Progressive
95% Personal lines (not my thing, I'm a commercial guy, but whatever)
Retention around 90%
Loss ratios around 30-40% most years, so meeting some profit sharing with Auto Owners
No AMS, all paper
Those are the basics. The owner is retiring and has no perpetuation plan. His primary gig is in real estate and the insurance has just been a side business for him. He doesn't make much from it, only about 30,000. I think he's grossly overstaffed and I see some areas where I could cut cost that I think he's overspending. Of course I'll also have some added costs in rent, an AMS, etc. My real attraction is the Auto Owners contract and just an investment into another agency for my first acquisition. I know I can grow it heavy in the commercial side in time. Of course I would like to actually make some profit off this place for my time and efforts, not to mention that I have to be able to pay the note on it. I'm a little concerned about being able to make anything myself on it.
Anyone done one similar to this before or have any thoughts?
Book is roughly a little over $2M in premium
Revenue last couple of years is hovering around 310,000
One very solid company (Auto Owners) filled with a few others like AllState and Progressive
95% Personal lines (not my thing, I'm a commercial guy, but whatever)
Retention around 90%
Loss ratios around 30-40% most years, so meeting some profit sharing with Auto Owners
No AMS, all paper
Those are the basics. The owner is retiring and has no perpetuation plan. His primary gig is in real estate and the insurance has just been a side business for him. He doesn't make much from it, only about 30,000. I think he's grossly overstaffed and I see some areas where I could cut cost that I think he's overspending. Of course I'll also have some added costs in rent, an AMS, etc. My real attraction is the Auto Owners contract and just an investment into another agency for my first acquisition. I know I can grow it heavy in the commercial side in time. Of course I would like to actually make some profit off this place for my time and efforts, not to mention that I have to be able to pay the note on it. I'm a little concerned about being able to make anything myself on it.
Anyone done one similar to this before or have any thoughts?
