1. Acquire | Grow | SucceedWhat you need to know for every phase of your agencys evolution

2. Our time todayAgenda 1. Buying an agency What a prospective buyer needs to know 3. Building your agency How to stay competitive & profitable 5. Selling an insurance agency How to get the right price from the right buyer 3. Agency Efficiency Scorecard Determine where you are at today Set a benchmark for where you would liketo be Identify frustrations 4. Agency Efficiency Scorecard 5. Buying an Agency Why acquire? Searching for the RIGHT agency Conducting due diligence Negotiating a price Obtaining financing 6. Why acquire? Grows income quickly Cost-effective Promises benefits of scale Sellers are motivated now more than everNote: Buyers will need to contend with due diligence & financing 7. Timeline 8. Searching for agency Determine criteria Agency size/premium volume Product mix Location Agencys condition Where to find agencies Assemble your support team Attorney | Tax Consultant | CPA | Valuation 9. Conducting due diligence Learn how the agency operates Identify reasons for the sale Understand policyholder/carrier relationships Review book of business/product mix Explore relationships with carriers Review all financials Examine non-compete contracts Assess compatibility 10. Negotiation Buyers underestimate the cost to acquireor cost savings Here are some areas to be sure you have ahandle on when negotiating the price you willpay: Technology Producers/Staff Office expenses Future commission/Cash flows 11. Balanced RiskBuyerSeller Lender 12. Obtaining Funding Funding options: Commercial loan at a bank Venture capital/Angel investment Peer investment/Self-funded Commission-based lender Need a lender that understands the valueof the future cash flows with commissions. 13. Action Planner 14. Stay competitive & profitable Develop a growth strategy Set realistic goals and determine a plan Agency management systems Producer development Knowing your customer Weaving in new marketing methods Fund your strategy 15. 4 Stages of Agency Growth1. Build your clientele2. Create a team3. Share the lead4. Grow past the owner 16. Goals & planning Determine where you are now/where youwant to be Identify areas for growth Set realistic goals Specific Measurable Accountable Realistic Time-Based 17. Planning Always have a plan, and believe in it. Nothing happens by accident.- Chuck Knox 18. Planning Sales plans Marketing plans Why a marketing plan? Becomes a roadmapto achieving goals Track success Monitor/Adjust Understand budget andtiming to meet goals Keeps everyone on the same page 19. Planning Building a marketing plan without the resources: Know your audience Find ways to be found Plan out tactics Set goals/Monitor progress Rinse and Repeat 20. Management systems Must be able to manage interactionsefficiently A good system will Provide in-depth understanding of clients Average income/client Show you the best types of clients Most profitable clients stand out 21. Producer development Build a team culture Be sure to include incentives & rewards Develop a dashboard and monitorfrequently Pay producers what they are worth Eliminate any not aligned with agencygoals 22. Knowing your customer Capture and maintain information oncustomers Track history/communications Create templates and checklists for staff tofollow Manage tasks Track prospects through to conversion 23. Information Maintain a database & maximize it Make updates important Ensure accuracy & completeness Ask for permission (print/email) Utilize information in interactions Birthdays/Anniversaries/Life Events 24. Information What can you do with all this information? 25. Personalization 26. Measurement Results matter Dashboards Metrics Goals Holds agency accountable Provides benchmarks Cut whats not working Increase what is working 27. MeasurementOne important metric to monitor with marketing is ROI. Return on Investment (Return Investment) InvestmentProfit Marketing Investment *Overhead Allocation *Incremental Expenses Marketing Investment 28. MeasurementFor exampleEmail Campaign Direct Mail CampaignGreat Marketing Resource- http://www.mplans.com/ 29. New marketing methods Build an interactive website Utilize SEO Build a presence Utilize digital marketing Communications News Prospecting 30. InnovationWhats not new: Insurance is all about sales Sales is all about two things Lead generation Closing 31. InnovationWhat IS new is HOW: 32. InnovationSo HOW do you innovate? 33. Innovation So HOW do you innovate? Build strong Calls to Action/Offer ValueSample Landing Page-Oak Street http://www.mantoothinsurance.com/ 34. InnovationSo HOW do you innovate? Be a resource Events/Education Newsletters Social Media/Blogging Facebook-Oak Street Twitter-Oak Street LinkedIn-Oak Street https://www.facebook.com/MantoothIns?v=app_198028816891495&app_data=wlbb%3D1 35. I have the steps, now what?Most important thing-start some where Three ways to accomplish: You create the plan/Engage staff to assist Create a master plan/Engage temp help Dedicated staff OR Outsource to anagency/consultantJust rememberIt doesnt all have to happen overnight. Its aprocess and will take time 36. Funding your strategy Initial acquisition funds/investment Owner capital Agency revenue Line of credit Working capital loan 37. Action Planner 38. The RIGHT Price & Buyer Give yourself time Assess your strengths & weaknesses Develop a financial platform Seeking a buyer Negotiating a price Conducting due diligence Arranging financing 39. Give yourself time Plan to prepare for at least 2-3 years prior tosale During this time, be sure to: Continue profit trends Keep clean & accurate financials/files Minimize major changes Ensure agency and assets remain free of liens or other encumbrances 40. Timeline 41. Give yourself time Secure your support team of professionals: 42. One year out Strategy 1: Assess strengths &weaknesses Strategy 2: Develop a financial platform Estimate FMV of business Analyze profitability/performance Determine the best sale structure 43. Seeking a buyer Assess current staff for successioncandidates Utilize a business broker Take advantage of listing sites: Agency Exchange (Oak Streets free service) AgencyEquity.com 44. Negotiating a price Consider several factors: Multiples of revenue EBITDA Sale Structure stock buy or asset buy Set a preliminary price 45. Due diligence Compare buyer/seller goals Determine buyers financial stability Request full disclosure of financials Secure commitment letter Clarify management structure 46. Arranging financing Funding options: Commercial loan at a bank Venture capital/Angel investment Peer investment/Self-funded Commission-based lender Need a lender that understands the valueof the future cash flows with commissions. 47. Action Planner 48. Case StudyComparisons & Contrasts 49. Agency Structure GoodLess Desirable Agency owns the policy Carrier retains ownership/control of policiesexpirations/commissions Agency passes ownership ofexpirations/policies down to sub-producers Producers are focused on sales and are MGA retains ownershipcompensated on production Producers have multiple responsibilities Non-compete, Non-solicitation and including office operations/CSR Producers are not compensated onConfidentiality Agreements are in place production receive a flat salarywith all employees Producers have all of the relationships with Owner/manager is aware of all day-to-daypolicy holders and there are no NCAs, NSAsor Confidentiality Agreements in placeactivities and has a presence in the agency Owner/manager is absentee and removed Relationships with local businesses (carfrom day-to-day processesdealerships, real estate agents, etc.) Owner/manager is over-involved in day-to-day and does not empower or holdemployees accountable Involved in local dispute(s) (landlord,competing agency, locally insured company/customer, etc.) 50. Carrier-Product Mix GoodLess Desirable AM Best rated carriers Non-rated or Demotech rated carriers Multiple carrier contracts with two to five Few carrier contracts/relationshipsstrong relationships Sub/Non-Standard business Standard/Preferred business MGA/Carrier retains ownership of Ownership of expirations customer Renewal/trail commission streams/vesting No renewal or trail commissions 1 time Various lines of business Property & upfront payoutCasualty, Life & Health, Financial Products, One product type/nichePersonal & Commercial 51. CreditGoodLess Desirable Low Credit Balance/Credit Limit Ratio High Credit Balance/Credit Limit Ratio Seasoned Accounts Several Newly Opened Accounts Average Number of Open Accounts Too Few Accounts=No History Too Many Open AccountsFew Inquiries Several Recent Inquiries No RECENT Derogatory Activity RECENT Derogatory Activity o No Delinquencies o Delinquent Accounts o No Collectionso Collections o No Judgmentso Judgment o No Lienso Liens o No Bankruptcy o Bankruptcy FICO 720+ = Excellent FICO 620-649 = Low Average FICO 680-719 = Good FICO 580-619 = Poor FICO 650-679 = High Average FICO