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How do you find independent agencies that are for sale?
- Thread starter chastain77
- Start date
- 4,992
Very tough time to be a local individual buyer. Massive private equity hedge fund money has been buying up at very top dollar thousands of small & huge agencies, even buying up large brokers, IMOs, etc. Some have done as many as 100-150 mergers & acquisitions each year for 5 years. Accrisure & High Street are both based in Michigan & were 2 of top 5 nationally in deals.
Some paying as much as 8-10x EBITDA. With higher interest rate market, you may see the record number of deals slowing down.
Never seen so much money thrown at this in my entire career. Personally know several owners that got stupid wealthy selling off way before they intended, etc.
Some paying as much as 8-10x EBITDA. With higher interest rate market, you may see the record number of deals slowing down.
Never seen so much money thrown at this in my entire career. Personally know several owners that got stupid wealthy selling off way before they intended, etc.
Go Steelers!
- 4,992
I know. They now have over 1,000 employees in downtown Grand Rapids MI.
It was acquired about 10 years ago & now has over $3B in revenue. That likely calculates out to around $20B-$30B in annual insurance premiums...........as agencies, not as a carrier. That premium would put them at about #5 or #6 largest if they were actually a carrier, bigger than all the premium of carriers like Farmers, USAA, Travelers, etc.
It is mind blowing.
Richard-PDIS
Expert
- 20
The only dedicated site for financial services firms that I know of is www.SuccessionLink.com . If you find a better website, PLEASE post it.
- 790
Good artical today about the hedge fund buying, and Indy buying: - [EXTERNAL LINK] - Misperceptions about agency values & private equity buyers | PropertyCasualty360
@shawnmwalker is right - talk to your Reps and build a good relantionship with them.
I considered selling a couple of years ago due to medical issues. As soon as the Reps released my name to others, my phone and email exploded with interest. The Hedge fund route was most interesting and hard for anyone else to match. The one I considered would pay me 100% of the determined price up front ( a very fair price) I then become a W2 employee with nice salary and full benefits for two years as I shepherd the accounts over. On top of salary is abililty to 'earn out' bonus, based on growing the book over that two years.
There were also plenty of fellow smaller Indy's that were interested as well.
I think the last place I would consider is using a broker who in turn would advertise on a national business for sale listing. Not needed and why pay their commission?
Good luck to you!
@shawnmwalker is right - talk to your Reps and build a good relantionship with them.
I considered selling a couple of years ago due to medical issues. As soon as the Reps released my name to others, my phone and email exploded with interest. The Hedge fund route was most interesting and hard for anyone else to match. The one I considered would pay me 100% of the determined price up front ( a very fair price) I then become a W2 employee with nice salary and full benefits for two years as I shepherd the accounts over. On top of salary is abililty to 'earn out' bonus, based on growing the book over that two years.
There were also plenty of fellow smaller Indy's that were interested as well.
I think the last place I would consider is using a broker who in turn would advertise on a national business for sale listing. Not needed and why pay their commission?
Good luck to you!
- 1,506
BTW PE (Private Equity) is aggressively purchasing agencies! And why not. Top quartile agencies return 30% profit! Thats a lot more than the stock market!
- 4,992
Agree in theory, but also watched banks go on a buying spree 10-20 years back & they discovered PC customer service was a lot more labor intensive & required more labor, etc. Local smaller independent & captive agencies are picking up a lot of business currently as some of these very large entities get even larger & are less local. Not saying it is affecting their bottom line enough, but there still is currently a segment of the market that doesnt like a national feel to their insurance agency. Seeing lots of PE also buying up HVAC, Plumbing companies, trailer companies & even lumber yards. only time will tell long term if the returns stay high or get diluted
I am guessing this time around, it is more likely to stick. If it doesnt, could be a bizarre un-raveling as there wont be enough small player money to handle the PE firms spinning it back off like can be the case in some industries when expense ratios get bloated or revenues shrink if/when carriers lower compensation, etc
- 7,012
Yeah this is the real answer. In the life and health space, there are 2 big "FMOs" owned/funded by private equity that are buying up everybody.
Give it a decade or two and PE and Big Business is going to own almost everything, in every sector.
I guess that's better than the government.
Maybe…
Integrity giving 7-10 times commission for a Medicare agency . So an fmo netting $1 mil a yr ( which isn't hard ) is getting $ 7 million plus . That's crazy especially when 70% of what their buying is Medicare business were the agent has an uncertain future . Individual agents only get 1.5-2 times commissions . I'd never do that . I'll simply take no new business and answer current clients and let it die over the yrs . You'd make 2-3 times the money doing that .
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