The
author makes the case that selling an agency can give the principals the best
of all possible worlds.
By Bryan W. Adams | January 16, 2019 at 06:14 PM
The thought of
planning for business succession and retirement can torment entrepreneurs
who’ve put in decades of dedication and energy into developing their own
successful insurance businesses. However, succession is becoming a hot topic
and more pressing issue as the industry ages.
A few years ago, a
report from management consulting firm McKinsey & Co. reported the average
age of an American insurance agent was 59 and as such, set expectations for the
entire industry that a quarter of its work force would retire around 2018.
In keeping, the U.S. Bureau of Labor Statistics reported that nearly 400,000
employees will retire from the insurance industry within the next few years.
Many successful
business owners are motivated to keep their agencies growing and thriving, but
want to spend less of their golden years working. Luckily, the last several
years have been ripe for consolidation.
Done correctly, this
can mean principals can see their legacy continue to grow, take some equity out
of the businesses, and have the option to stay involved with company
management. This situation becomes a win-win for everyone involved.
Being Acquired Does
Not Have to Mean Stepping Away
Owners have the choice
of making continued investments into growing the business independently, and
taking on the risk/reward element associated with that, or finding a partner
that would provide the resources, skills and opportunities to grow more safely
and efficiently. By entering into an acquisition agreement, owners can ensure
security and peace of mind not only for themselves, but also for their family
of employees.
An advantage of such
an acquisition is that the acquiring company will have the priorities and
programs in place to alleviate a lot of the work and worries that bog down
business owners. Not having to worry about HR, IT, finance and compliance is a
game-changer. With these important areas of the business in good hands, owners
can focus on sales and marketing.
Owners can also gain
access to best practices from an industry leader and new products that they
don’t have access to as a smaller entity. Finally, management of the acquiring
business can provide insight, support and guidance to leadership when needed.
Advice From the Field
When asked what they
wished someone would have told them in relation to succession planning, three
colleagues shared the following thoughts:
·
Maggie
Fleming, co-owner, president and chief executive officer, Neishloss &
Fleming:“ Consider all of the
options you have when starting down the path of succession planning. Don’t
close any doors unless they strongly conflict with your goals and values.”
·
Tom
Fleming, co-owner and chairman, Neishloss & Fleming: “Put as much time and energy into a
succession plan as you would put into other elements of your business. You
should always be working on your exit strategy along with everything else,
because if you wait until you need that plan, your choices may be limited and
your appeal may be diminished.”
·
Lenny
Anderson, founder of Minneapolis-based GoldenCare USA: “Understand that selling your business
is not the equivalent of walking away. Selling can mean maximizing the value of
your business and still work passionately at building it.”
Bryan W. Adams is the
co-founder and chief executive officer of Integrity
Marketing Group, an independent distributor of life and
health insurance products focused on the senior market.
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