As title says, I'm looking at buying an agency. Would be my first acquisition. Not really sure what I think of it.
This would be an additional agency to the one my family and I already own. Would be operated under the same name but would technically be its own legal entity as my dad doesn't really want the debt at his age and doesn't want any more headache; so I'll be 100% owner of this. The positives are that it is in a good location in a town about 30 minutes from where we are, has a quality staff of three (one of them is the agency manager), about $4.25M in premium of which 90% is commercial, and has a pretty good niche in a specific industry. Also, the current ownership doesn't put a ton into it and their business is mostly local based; my plan is to take it state-wide and beyond as my family agency is.
Now the negatives: a good percentage of the business that they write (almost 40% or so) are family owned enterprises from the current ownership. They're into a lot of stuff and it makes for some alright premiums but once the sale is over that's having a lot of eggs in one basket. Secondly, as I mentioned above they have a niche market; but it is almost so strong that they're not as spread out as I'd like. The second issue doesn't bother me as much as the first but it is still to be considered.
Carrier lineup is neutral factor. They have some of the same I have but I'll be bringing aboard some new.
I haven't gotten into the data yet in terms of tax returns, loss ratios, etc., etc. But it's the two issues above that keep gnawing at me presently.
Anyone encountered an acquisition situation like this before?
This would be an additional agency to the one my family and I already own. Would be operated under the same name but would technically be its own legal entity as my dad doesn't really want the debt at his age and doesn't want any more headache; so I'll be 100% owner of this. The positives are that it is in a good location in a town about 30 minutes from where we are, has a quality staff of three (one of them is the agency manager), about $4.25M in premium of which 90% is commercial, and has a pretty good niche in a specific industry. Also, the current ownership doesn't put a ton into it and their business is mostly local based; my plan is to take it state-wide and beyond as my family agency is.
Now the negatives: a good percentage of the business that they write (almost 40% or so) are family owned enterprises from the current ownership. They're into a lot of stuff and it makes for some alright premiums but once the sale is over that's having a lot of eggs in one basket. Secondly, as I mentioned above they have a niche market; but it is almost so strong that they're not as spread out as I'd like. The second issue doesn't bother me as much as the first but it is still to be considered.
Carrier lineup is neutral factor. They have some of the same I have but I'll be bringing aboard some new.
I haven't gotten into the data yet in terms of tax returns, loss ratios, etc., etc. But it's the two issues above that keep gnawing at me presently.
Anyone encountered an acquisition situation like this before?
