Got The Urge To Merge?

Many independent agencies struggling to survive in this anemic economy are eager to sell or merge with a bigger operation to bolster their leverage with carriers, gain access to new markets and achieve economies of scale. But even though the credit crunch is not necessarily dampening buyer appetites, pulling off a deal is far from a slam dunk these days, principals are being warned.

I moderated a panel of some of the biggest buyers in the business yesterday, presented by Hales & Company and sponsored by the folks over at FC&S Bulletins–a National Underwriter Company subsidiary. They offered some very keen insights into the hurdles agencies must clear to attract a buyer and earn top dollar on a sale in this capital-starved market.

Among the majorpoints cited by the buyers is that it’s hard to value an independent agency these days, given the fact that with the bottomfalling out of the economy,even achievinga 100 percent renewal rate will normally meanlower revenue for agents,since so many clients are cutting back operations and laying off staff that insurable risks are down considerably.