INSURANCE AGENCIES
Perpetuation Planning
The long-term plan for transferring agency ownership to the next generation — internal employees, family, or outside buyers.
DEFINITION
Perpetuation isn't a one-time event; it's a multi-year structure. Done well, it preserves the value of the business, rewards the owners, and keeps the agency intact. Done poorly, it triggers tax surprises, valuation disputes, and the slow loss of book of business to better-prepared competitors.
WHEN IT MATTERS
Five to ten years before the principal owner expects to step back — earlier is better.
RELATED SERVICES
COMMON QUESTIONS
When should agency owners start perpetuation planning?
At least five years before transition. Funding internal buy-ins, aligning producer comp with future ownership, and structuring the entity for transfer all take time.
R · RELATED TERMS
INSURANCE AGENCIES
Contingency Income
Performance-based bonus compensation paid by a carrier to an independent agency, tied to volume, growth, and loss-ratio metrics.
INSURANCE AGENCIES
Carrier Override
Additional commission paid above the base rate, usually for hitting volume or growth targets with a specific carrier.
INSURANCE AGENCIES
Agency Multiple
The valuation multiple — usually expressed as a multiple of EBITDA — used to price the sale of an insurance agency.