You probably have seen the life insurance commercial that leads with the commentary that 10,000 Americans retire every day. News flash: some of that number is insurance agency owners and principals. Recent studies indicate that approximately one-third of all agency principals are older than age 55 or plan to retire in the next 10 years.

Our industry is poorly prepared to internally absorb that much equity over the next 10 years and beyond. The system simply has not developed the people power—the next generations to acquire the equity of the retiring principals and lead those firms into the future.

Many principals view perpetuation not as a process but as an event, something they can accomplish in the next year or two. The reality: You need 10 years or more to get the right people in place.

If you are at the back end of the boomer generation and have about 10 years to get your plan in place, run—don't walk—and recruit and train talent who will enable your exit. It is an often arduous process that you will need to commit capital to make it work.

If you don't have the benefit of the 10-year window, prepare for the firm to be sold. Your value resides in the strength and viability of your earnings. Clean up the financial side of the house; make sure your books and records are accurate, including the balance sheet. Watch the expense side of the ledger and make it easy to identify non-recurring and other soft-dollar items. Make sure you have the right support staff in place. Replace weak players and eliminate the extraneous.

Depending on the situation, you may want to be at the front end of the sell side cycle as the inventory of prospective acquirers may diminish over time due to all the inventory of sellers or they may simply be able to push down on pricing as they capitalize on a buyer's market.

And for those younger than the boomer generation, don't fall into the trap of your senior brethren. Embrace with gusto the notion perpetuation is a process and not an event.

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