This post is part of a series sponsored by InsurBanc.

Buying an agency is one of the most meaningful and long-lasting financial decisions a young agent will make. We’ve all heard about first-time home buyers: Well, the process and the decisions can be comparable.

Ask yourself: How much can I afford? What’s available on the market? What are my long-term goals? Am I ready to stop renting (producers) and purchase (agency owner)? When purchasing becomes the right decision for you, it can be challenging. You should take the time to become familiar with the essential steps and tasks to get you on your way.

  1. Keep your personal finances in order.
    When financing is required for your purchase, lenders will look at your personal financial history — credit and repayment — in their decision to provide capital. Start now by reviewing your credit report and making sure everything is in order. Review your spending. Be smart.
  2. Determine the type of agency that will fit your needs.
    As with your decision to purchase a home, there are many types of agencies that may or may not be right for you. Consider the mix of products, the geographic market and demographics, carrier relationships, etc. Not every agency will be the right match for you.
  3. Research the various financing options available.
    The types of capital structures vary based on the seller’s and buyer’s plans, tax considerations, the ability to sustain and grow the agency after the purchase, whether it will benefit both the seller and buyers, etc. This is a conversation you should have with a lender that understands the agency business model, intangible assets and cash flow. Financial structures can be customized to tailor fit each unique transaction.
  4. Find the property.
    Ideally you would be producing at an agency with the possibility of being part of the perpetuation plan. Talk to the owners early on and learn what their plans are for their retirement or to start perpetuating ownership over time. Raise your hand and let your interest be known. Do your due diligence on any purchase: Determine the seller’s motivation, review financials to determine profitability and growth potential, analyze the book of business and carrier relationships, evaluate employees, etc.
  5. What professionals will guide you through the process?
    Purchasing an agency requires knowledge in areas where you should seek outside, professional help. You will need a valuation company to determine a value for the agency, an accountant to review tax returns and financial records, and a lawyer to review your business plans and purchase contract. Surround yourself with the right team.

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