Questions about selling an agency

[No Cute Name]

I have some questions about logistics when selling a book of business. For purposes of this thread, let's say I own a captive agency for 20 years. It's time to retire and I want to sell my book. Several specific questions if anyone would be kind enough to help me.

1. I would always get more money for my book selling it on the open market as opposed to selling it back to my carrier, correct?

2. When an agency goes up for sale, does it typically sell rather quickly? Are there usually a lot of interested buyers lined up right away? Or does it typically take a while?

3. What is the typical selling price? 10 cents on the dollar? 15? Something else?

4. When selling my book, do I get one lump sum check? Installments? How long do the payments last?

A lot of questions, I know. I also realize there are a lot of variables involved-time, place, carrier, type of business, etc. But if anyone can give me some general answers, I would appreciate it. Thank you so much.

 

[Markthebroker]

When you have a captive book, IF you can sell it, you are usually subject to what the captive company allows you to do, and your contract.

If you can get specific, so can we.

 

[fed up]

Dont know who you write for or if you are buying or selling. But, in general, figure somewhere between 1 to 2 1/2 times the value if the book. The selling agent may want monthly installment ( a retirement pension) or an outright purchase.

 

[billyb]

Not sure you own your book if you are captive.

 

[Markthebroker]

Not sure you own your book if you are captive.

Yeah, that was what I was getting at in my response. He's a AAA recruiter, so I'm not sure what is angle is here. Maybe he is trying to get some metrics to weave into his sales pitch so he can paint a retirement picture anyone who will buy into it.

 

[fed up]

Captive Allstate agents own their books, Farmers agents own their books

 

[No Cute Name]

Thanks for the replies. When an agency owner retires and their business goes up for sale, are there typically a lot of buyers lined up? Or does it take a while to sell it?

 

[fed up]

Thanks for the replies. When an agency owner retires and their business goes up for sale, are there typically a lot of suitors? Or does it take a while?

why would that matter to a recruiter for AAA? BUT, to answer your question and depending on the carrier: Farmers has a legacy program where the agency can be gifted to a family member. If that is not in the cards they will buy it back if no suitors. Allstate will also buy the book back if no suitors. You lose a bit of the value under these situations but it beats working for a carrier where you don't own the book, give them 20 years, and have just your retirement while someone else works your book and retention.

 

[whatyouwantfinally]

I have some questions about logistics when selling a book of business. For purposes of this thread, let's say I own a captive agency for 20 years. It's time to retire and I want to sell my book. Several specific questions if anyone would be kind enough to help me.

1. I would always get more money for my book selling it on the open market as opposed to selling it back to my carrier, correct?

No. Take out the "always" and I'd say probably.

2. When an agency goes up for sale, does it typically sell rather quickly? Are there usually a lot of interested buyers lined up right away? Or does it typically take a while?

Weird question. The number of "interested buyers" depends on the book, asking price and the number of people aware it's for sale. Just like selling anything else.

3. What is the typical selling price? 10 cents on the dollar? 15? Something else?

.75X to 3X revenue, depending on lots of things.

4. When selling my book, do I get one lump sum check? Installments? How long do the payments last?

Same as selling anything else; it depends on the deal worked out between buyer/seller.

A lot of questions, I know. I also realize there are a lot of variables involved-time, place, carrier, type of business, etc. But if anyone can give me some general answers, I would appreciate it. Thank you so much.

General answers here are the same as selling literally anything else.

 

[No Cute Name]

Thanks, What. That was helpful.