One of the really great things about owning an independent insurance agency is that you are Independent! You can and do make choices every day that affect your agency’s performance and success, both in the short-term and long-term. In other words, you have options and you’re exercising them, some more purposefully than others. As we look forward to 2015, now’s a great time to examine some of the options you have concerning the future of your agency.
In most cases, this is not the optimal choice. Not always, but usually. You might create some economies of scale, but you won’t necessarily create a great agency.
The local competitor who wants to acquire your agency may not have the financial strength to finance or cash out the transaction, making it likely that you’ll become “The Bank.” At the local level, cash buyers are rare, so if you agree to finance the sale, it’s always possible you’ll wind up with a bad loan. Although this may be the only option for smaller agencies, ideally it’s not the way to go.
Merging with a local competitor, with the thought that one plus one equals way more than two, certainly can work very well. However, designing the agreed upon model upfront cannot be short-changed. Again, it’s an option.
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