The answer to the “why do” a succession plan is to continue the life of the agency beyond the founder’s or current owner’s work life. The answer to the “how to do” a succession plan is not so simple or easy. To start there has to be a mutually agreed upon valuation of the agency. Then the parties involved have to work out all the details of the purchase and the transition.
The value of the rep firm is based on a number of factors, not limited to but including the lines the agency represents as well as the current owner’s knowledge, relationships, and reputation for the way he/she does business in the territory and industry. No matter the reason for the owner’s departure from the agency, the next owner has to demonstrate to their Principals and customers that he/she is capable of maintaining the level of professionalism, relationships, knowledge, and customer service previously established.
Now more than ever, with the large number of Baby Boomers beginning to retire or looking at retiring, a solid plan must be in place to realize the full value of the agency and assure business partners of a seamless transition and continuation of the same level of commitment and professionalism to which they have become accustomed.