What kind of agency owner are you?

2020-09-13T19:12:29-04:00March 23rd, 2020|

I have had the fortune of interacting with hundreds of business owners over the years.  Going even back as far as my college days when I bar tended at a yacht club, I’ve always tried to take note of successful [...]

Projecting Cash Flow from an Agency Acquisition

2020-09-16T10:04:23-04:00January 14th, 2019|

In my post from October, I discussed debt coverage ratios and EBITDA multiples. Now let’s talk about projecting cash flow. I’m shocked how many buyers make offers without figuring out what the cash flow will be with financing. I’m not alone either. I’ve spoken with many loan officers that deal with the same issue. This article is long overdue.

Financing Agency Acquisitions – Understanding Debt Coverage

2020-09-13T19:02:08-04:00October 11th, 2018|

Different lenders underwrite acquisition financing a little differently; however, they all typically want to stay under 6 x EBITDA on leverage.  The reasoning is fairly simple…cash flow.  As we’ll see below, agencies don’t cash flow well when they leverage themselves over about 6 x EBITDA.  One of lenders’ key underwriting metrics is something called the debt coverage ratio, which is a measure of the cash flow cushion over debt payments. 

If you can’t Grow, it might be time to Go!

2020-09-13T18:53:40-04:00April 20th, 2018|

When agency revenues start to fall year-over-year, there is usually a reason.  Sometimes the trend can be reversed, such as if it is tied to an economic cycle, but quite often the downward trend is unstoppable.  In our experience, a steady decline in the business is typically an indicator that one or more of the agency principals are spending less time running the business.  The enthusiasm and competitiveness that perhaps once drove growth in the business has waned. 

What is Preventing Your Agency from Growing?

2016-02-21T06:39:37-05:00February 21st, 2016|

What I’ll discuss in this post differs from most of my other ones.  The discussion is an amalgamation of my studies, experiences and observations from working with business owners over the last 10 years.  During that time, I have analyzed [...]

Insurance Agency Financial Models

2020-09-13T18:24:32-04:00October 3rd, 2014|

A key to running a profitable insurance agency is understanding your target financial model, i.e. how you allocate your revenue to various expense items.  If you were not aware, every business does have a financial model.  There are resources available [...]

Insurance Agency Marketing

2020-09-13T18:17:04-04:00March 22nd, 2014|

One of my favorite hobbies is studying marketing trends and tactics.  Insurance agents have a wide range of marketing tools and options at their disposal.  It’s the reasons that the insurance brokerage business is one of the best for marketers.  [...]

Protect Your Data from Online Theft

2020-09-13T18:12:49-04:00March 4th, 2014|

A new online extortion cyber threat called CryptoLocker could affect anyone who has a computer, and especially people who use Facebook. If you activate the program, a message appears and tells you to pay money or your computer will be [...]

Producer-Owned Books: A Potential Deal Killer

2020-09-13T18:12:09-04:00February 11th, 2014|

We occasionally run into insurance agencies that have independent contractor producers that own the rights to their book of business.  These arrangements almost always create a problem with selling an agency.  The arrangements usually evolve from the principals’ desire to [...]