Looking for Advice on Buying Existing P & C Business

[Insurance-Guy]

Agree 2.5X is too much for it.

 

[Air Jer]

Then after all of this is done, make sure the insurance companies will give you a contract. Just because you buy an agency does not guarantee that the carriers won't walk.

 

[b61mack]

Maybe offer to work for him awhile. to learn the business, and get a feel for the clients. Then as stated before, pay as the book is earned. If he is older and wants to retire, this approach may work... He could get more money forthe book, and he has a vested interest, to help you suceed

 

[AgencyEquity]

I have read several threads and posts, and have gathered some great info on this subject, but I would like to get some specific feed back and advice on my situation.

I currently work in a major bank as a financial advisor and have been in this role for about 18 months (series 7, and 66), but I have been with the bank in another role for close to six years (series 6 and life and health). I have the opportunity to buy an existing p and c firm that has an established book of around 500 policies. The owner is willing to stay on and train me for a few months and poss stay with me as a producer as time goes on. Everything on the surface looks good except his revenue has been declining for the past 5 years. Currently, it is about 130k for 2011, but was 185k for 2010 and it was higher in 2009. This appears to be a great opportunity for me to go out on my own. I would plan on offering financial services as well once the p and c recovered, but my concern is what if the p and c is too far gone? What would be a fair price to pay? I have also never sold p and c ins, but I have experience selling fixed annuities, var annuities, mutual funds, and managed porfolios. Any advice is greatly appreciated.

If you have not done P&C, I would stay away because you really need to understand the agency to realize why it is losing business. Also without the P&C experience, even with training, my opinion is you really need to get experience before making an acquisition. Nevertheless, check out my website linked below, there are a number of consultants and valuations professionals who can give you some professional insights on the specific agency you are looking to acquire.