Insurance Industry

The insurance brokerage space has been one of the most resilient industries over the years and we believe there’s continued momentum towards growth. While business owner head count has been in decline, accelerated by aging owners’ retirement, there’s a consolidation trend we believe will continue to bode well for those pursuing an exit strategy in the near term. Valuations continue to rise and buyers out-number sellers by a wide margin. Getting a deal done may not be all too hard. Getting a deal done with an advocate on your side can ensure the right deal gets accomplished at attractive valuations.

If you are considering an exit, even if years from now, strategy and planning is essential and should start as early as possible.

Our team can help you begin the process, outline a plan and implement a road map towards a successful exit.

Insurance Valuation Process:

Step 1: Discovery

Identify purpose
Discuss operations
Collect data

Step 2: Analysis

Build valuation model
Analyze knowns & unknowns
Discuss projections

Step 3: Refinement

Complete initial draft
Review discussion with management
Refine model

Step 4: Finalize

Finalize value
Develop report narrative
Issue final formal report

Formal Valuations Are Essential for Any Transaction or Succession Planning


A valuation is a crucial financial analysis for:

  • Transaction discussions
  • Estate planning
  • Succession planning



Valuation firms provide expertise in:

  • Financial analysis
  • Forecasting guidance
  • Risk assessment
  • Industry dynamics

A formal appraisal report will give you:

  • Detailed analysis of your agency’s value
  • Commentary supporting all assumptions
  • Standardized financial schedules
  • Base-line Fair Market Value of your agency
  • Proprietary COVID19 impact overview narrative

Do I have to Start Thinking About This Now? I can wait…


  • More and more owners are nearing retirement every day, expanding availability of practices and increasing competition among sellers
  • Buyers will begin to have more and more options (buyer’s market) possibly depressing valuations
  • Unplanned transitions may result in ~30% discounted value or more in case of a fire sale
  • It takes time to exit, on average about 8 to 9 months, adding further risk to valuations
  • Tax environment is expected to change, more likely unfavorably given potential for a new administration and the burden of recent stimulus package(s) will entail
  • In case of death or other serious circumstances your would-be successors or family may not be prepared or knowledgeable enough to continue running the practice
  • Worse even would be to simply let the practice die and realize no return for all of your time and effort all these years


Industry Dynamics Have Driven Up Valuations and Transactions


  • Recurring revenues
  • Cashflow business with low CapEx requirements
  • Ability to obtain sustainable leverage
  • High controllable EBITDA margins
  • Acquisition opportunities in fragmented market
  • Barriers to entry
  • Robust secondary market
  • Requirement to purchase insurance
  • Impact of amortization of intangibles on taxable income
  • Stability in down economy

I Need to Start This… Now What?

Begin assessing your situation and ultimate goals: Where am I today and where do I want to be tomorrow?

  • Retire asap
  • Exit in 6 to 12 months
  • Give it another 2 to 3 years

Available options and considerations

  • Internal sale to next generation or current partners
  • Apparent successor?
  • Buy/sell agreement?
  • Ability to pay?
  • Ability to run practice and be successful?
  • Need for seller financing?
  • Ability for agency to get bank financing?

External sale

  • Ready to go to market?
  • Value expectations?
  • Legacy?
  • Employees?

The More Time and Preparation You Commit Now the More Successful an Exit You Can Accomplish

In order to understand what and if any available options makes sense you will need to first understand the value of your agency – with this knowledge you are better prepared to start the process and develop the best strategy!

  • Find out value of your practice
  • Evaluate all options available to effectuate an exit
    • Analyze benefits and drawbacks
  • Consider your people and legacy
  • Consult with advisors on financial, tax, and legal implications

Once you understand where you are today and what you want to accomplish you can develop a solid strategy and begin to execute!

Ready to start?

For more information and to talk to a MS Capital expert, please tell us a bit about yourself.

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