If you’re considering an insurance agency acquisition as part of your business growth strategy, it’s important that you put time into understanding any agency (or book) that you’re considering purchasing. Going through a thorough due diligence process - examining detailed information from the seller regarding agency operations and finances - will ensure that you understand what you’d be purchasing and whether it would be a good fit for your existing agency.
Here are some useful tools if you’re an agency owner and you’re considering building your agency through either acquisition or organic growth. Our Lending Advisors are always available to discuss this with you, or to walk you through these tools as you consider the right growth path for your agency.
Outstanding Loans and Credit Tracker
As you consider taking on any new debt, it’s important to first be aware of all of your existing debt, including credit cards. Use this tracking sheet to record all of your existing debt so you can see it in one place. This seemingly simple exercise will help you avoid overlooking or forgetting any source of debt that’s a part of your agency’s current financial picture.
Agency Cash Flow Projection Worksheet
This is a highly simplified tool you can use to predict your agency's future financials. Simply enter your actual bank balance as of today in the green cell beneath "Month 1" and then enter expected income and expenses for each month. Your estimated closing cash balance for each month will then auto-calculate.
Loan APR Affordability Tool
To consider whether your agency can "afford" to take on financing, it's critical to ensure that it can generate enough cash flow to support the financing expenses of a loan. Follow the steps below to determine if you can afford the loan you're considering.
Loan Performance Analysis
This tool will help you analyze how a loan will impact the financial performance of your agency. If the impact over your preferred time horizon is profitable, then that might be a good reason to take the loan.
Agency Acquisition Cash Flow Projection Worksheet
Use this tool as you consider a possible acquisition. It will help you understand the financial implications of the acquisition on your agency's cash flow over the next 15 years. You can also see the impact that borrowing will have on your cash flow. And you can compare your agency's annual profit if you acquire vs simply growing organically.