Buyout Fell Through... Should I Leave or Stay

Discussion in 'P&C Insurance Forum' started by TravisT8016, Jun 16, 2017.

  1. TravisT8016
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    TravisT8016 Member

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    First post here... read tons of helpful hints over the years but never signed up because I never had a question...

    Here's my situation.

    My current principal hired me 01/01/2016... I had 4 years of life insurance expirience and he hired me with the verbal agreement of him selling his book/business of about $425,000 commission on 01/01/2018. Well we're 18 months in and he just informed me he wants to work another 5 years. I'm 27, he's paying me a modest salary of 48,000 + lower than industry average commissions. My production has been minimal as I have been more focused on learning the P&C world, getting accustomed to current clients, and managing the office of 3 CSR's.

    He's willing to keep me on but I'm not really content with being at 48k + commission for the next 5 years. I could get a job in the medical device world tomorrow and make 150k.

    I have 3 agents lined up to start selling under me when I was going to buy the business next year... 1 I'm stealing from another indy agency... 1 I've worked with in the past and she's a rockstar at sales (mom is also a VERY successful farm bureau agent), and another is a family member who's wifes a doctor and wants to fish at 3 o clock every day buts wants some spending money.


    So if you guys were in my shoes... would you stick around for 5 more years making 48K + commission... eventually buying him out for 2X multiple... or would you bite the bullet now and try to get a couple good contracts and never look back...

    A couple points that might change things.


    My dad is purchasing a financial advising book with 400 clients in a couple months. Could be a very lucrative referral source.

    My current principal is stuck in 1970 with technology. It drives me crazy... all our commercial is paper files. I can't work mobile. We don't even have an operating website. He has a lot of personal clients that come in to make payments and call in every month. He has a very old school way of doing business.... never heard of SEO let alone on board to use it. He is a main street brick and morter agency and my attitude is much more mobile and digital. All the agents I was planning to hire for next year were going to be working from home, utilizing my CSR's, 100% commission agents.

    We are in semi-rural Kansas.. Town of about 20,000 but 30 minutes away from a metro.

    Thanks in advanced. Kinda bummed. Hope it all works out....
     
  2. djs
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    djs Super Moderator Moderator

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    I'd quit and go work the medical device sales gig. Seriously, why wouldn't you if you can get it? Its 3 times the pay.

    If you are 18 months into the current job and still getting accustomed to current clients, then you need to rethink buying the agency. I may be over reading your statement on this, but you really should be up to speed by now. If your production is low, you need to rethink it as well. Learning new stuff is great, but not if it prevents you from pulling your own weight in an organization at 18 months in.

    My advice is to be a go-getter. Get a lot more motivated in your endeavors. Your post reads a lot like me at that age, where I had a plan and expected things to fall in my lap. I've learned since then, the plan needs to be gone after with great passion or it won't happen. If you want to be an agency owner, then be an agency owner. If he doesn't want to sell his book, buy another one. Just make it happen. If it was easy, everyone would do it.

    Make it so.....

    Dan
     
  3. b61mack
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    b61mack Well-Known Member

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    Either start your own agency, or sell the medical devices. 150k sounds good to me.
     
  4. xrac
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    xrac Well-Known Member

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    Either one. This gig is not worth staying around for. Are you married to staying in that small market?
     
  5. entrep1776
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    entrep1776 Well-Known Member

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    Is $150k>48k +commissions?

    Have you ever made $150k? Did you leave $150k to make $48k +commissions?
     
  6. DHK
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    DHK Well-Known Member

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    You answered your own question in your post. In this business, we reap what we sow.

    Why did you get into the insurance business in the first place?
     
  7. LostDollar
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    LostDollar Well-Known Member

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    (Not an agent)

    If you have the capital, start your own agency. Work on getting the electronic stuff in place. The big risk is probably CSR cost if you need a CSR to start with.

    Figure your market approaches, both local and in surrounding area and start working them.

    Develop a plan with your dad for whatever appropriate insurance cross sell you can provide to financial book.

    Steal the progressive 1/3 of your current agent's clients. 12-18 months out, if he has not brought somebody else in, you can then negotiate another business transfer arrangement from the position of a successful competitor rather than the position of his employee.

    Maybe there is another small marginal agency in the community that you could do a buyout on now to gain an immediate presence and base.
     
  8. xrac
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    xrac Well-Known Member

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    $48K and doing virtually no production is more than fair.
     
  9. insurance1822
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    insurance1822 Well-Known Member

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    Why not go commission only & if you're going to buy the book eventually....ask him to give you the full up front & renewal on what you write moving FWD in exchange for assisting w/ service on his existing book. Then when you take over you get his book + the one you built.

    When I was 26 I walked from my salary (bigger then yours) and opened my own scratch agency. Almost 6 years & 5MM later...was the best decision ever. Sink or swim my friend.

    ...sounds like you were hoping to get handed a legacy golden parachute of a book. Nothing is free & agency owners will NOT walk away from an income stream until there's illness or death so don't count on that 5 years.

    Not to mention based off the performance of his book, it may not necessarily be something you can take over. If he's continuously shrinking w/ carriers or having loss ratio issues...they may not approve a new owner simply to get off the book.
     
  10. LostDollar
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    LostDollar Well-Known Member

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    would that allow him to also add an agent of his own under those same terms and use existing agency csr support as he planned to do when he had full charge?
     

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