What a Buyer Checks First
- Retention rate on policies for the last three to five years
- Commission income by carrier and by line of business
- Carrier contracts and whether each carrier must approve a sale
- Which producers and account managers own the client relationships
- Errors and omissions claims history and open complaints
The Book Is the Business
An agency sells its renewals. Buyers study how many policies stay year after year, because a book that keeps renewing is worth far more than one that leaks clients to a competitor.
Many agencies sell for a multiple of yearly commission revenue rather than profit. The multiple moves with retention, the mix of personal and commercial lines and how many carriers the agency uses.
Carrier Contracts Decide What Moves
Agency agreements with carriers often limit who can take over the book. Some carriers must approve the buyer, and some can take the renewals back. Read each contract before you talk to anyone and list the ones that matter most to income.
Contingent commissions are usually not guaranteed to a new owner, so buyers discount them.
People Hold the Relationships
If one producer brings in most of the commercial accounts, a buyer will ask whether that person stays. Written non solicitation terms help, and so does a plan for introducing the new owner to clients before closing.
A deal often includes a paid transition period. See how seller financing terms can tie part of the price to retention.
Licenses and Records
Individual producer licenses do not transfer. The buyer's team must hold their own in Nebraska, and the agency should keep its policy files, notes and renewal calendars in a form that can be handed over.
Most agencies sell their assets, not their shares. Our guide on an asset sale or stock sale explains why that affects the tax bill.
Preparing the Agency
Clean up the client files, confirm every producer has a current contract and gather three to five years of commission statements by carrier. Buyers lose confidence fast when an owner cannot answer where the income comes from.
For a first number, ask for a confidential estimate.