subscribe: Posts | Comments

Buying an Insurance Agency – Things to Learn

Comments Off on Buying an Insurance Agency – Things to Learn

buying an insurance agencyIf you are planning to buy an insurance agency, you should understand that there are lots of people planning for the same. In other words, you have a tough competition to face. It becomes even more difficult if you are an agent who doesn’t own an agency at present. You can take help of some firms to buy an insurance agency. E.g. AgencyClassifieds.com is a website of a company which is dedicated to helping insurance agents buy, sell and grow their agency. We will discuss here how you can be successful in the mission of acquiring an insurance agency.

Evaluate What You can Afford

It’s true that one sign of a good agent is s/he thinks big. However, when it comes to purchasing an agency, you should be more of realistic. In general, a buyer requires 20% to 25% of any probable purchase in cash to make the down payment and running capital to operate the business. This means that if you have $200K in cash, you could acquire an agency worth $800K to $1M. Apart from down payment, you will also need to borrow 50% or more of the buying price from a third party lender to fulfill the down payment need of the seller. While a few transactions still have a sizable level of seller financing, this practice has become uncommon because of the increased competition among buyers and availability of third party lenders.

Organize the Money

Most business buying-selling transactions have 3 factors involved: the buyer, the seller and the financer. All of them should be happy with the terms of the deal to make it happen. In some cases, the seller becomes the financer, while sometimes there may be an investor involved, but usually there’s a third party lender. Only a few lenders finance the deal of buying an insurance agency. They too are of different types like asset-based (commercial banks), cash flow lenders and even commission-based lenders. Each of them has different guidelines about the deal. Depending upon the guidelines one lender may be good for one specific deal but not for another. You should understand how every lender decides what they will lend, what their expectations will be from you and if the structure is acceptable for the transactions. Several buyers miss excellent opportunities just because they need to keep hunting down financing while some others have done that already and so, grab that opportunity.

Be Quick

While acquiring an insurance agency, you have to become a little forceful because otherwise your competitors may surpass you. There’s nothing more miserable than the thought an opportunity was available and you missed it just because you didn’t act faster enough. If you are short of time but are really interested in buying an agency, consider outsourcing. As mentioned earlier, AgencyClassifieds.com is excellent for this job.

Being persistent and taking help of firms like AgencyClassifieds.com will definitely make your mission of buying an insurance agency successful.

Recent Posts

Categories