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In recent years, the insurance industry has been consolidating. In order to succeed in these conditions, many brokers are choosing to grow by buying their competitors. Since many brokers are reaching the age of retirement, they’re putting their insurance firms up for sale so there is no better time than now for such an acquisition.
Time to Decide
Several avenues are open to brokers who want to retire. You can sell your practice or your client portfolio to another broker who wants to expand their territory, for example. You can also leave the company to your children if they wish to continue the family business.
This was the case for Jean-Jacques Després, of Courtiers Multi Plus in Montreal, who had a succession plan in place. He therefore passed the ball to his two sons rather than trying to sell his office.
Having taken over the reins of the practice himself from his father, it was important for him to transfer the business without stifling the new generation. He also planned the transaction well. “I set up an estate freeze of my shares so that it would be my children who would benefit from the growth,” he explained. “Around 2005, I passed the presidency to my son, Benoit.”
Of course, the transaction didn’t allow him to rely on his company to fill up his pension fund, since he didn’t sell his shares. However, even if he has to keep working, it’s a situation that he’s OK with. “I don’t see myself at home,” said Mr. Després. “I want to stay active, and today, I’m only doing the things that make me happy!”
Selling When You Have a Succession Plan
For François Laurence, who sold his insurance office in Saint-Hyacinthe in 2012, it was the direction that the industry was heading that convinced him to sell. “I didn’t feel like entering the acquisitions game,” he said.
However, the presence of his daughter in the business caused him to reconsider how he perceived the transaction. “When Julie came to tell me that she wanted to take over the office, I was very happy,” he said. “At the same time, that gave me an additional responsibility: I wanted to leave, but I had to make sure that it could keep going for her...”
In his case, as in others, finding a buyer who has the means to buy a firm wasn’t the main issue. Financing that allows a buyer to purchase an office for sale is available. “The insurance field is a stable sector, and the market recognizes a significant value for this type of company,” said Jean-François Julien, Account Manager – Business Services at National Bank.
“I also wanted a buyer who would agree to open their capital so that my daughter has her place,” clarified François Laurence.
He finally stumbled upon his buyer in the president of a large network of insurance firms. “I had the idea of involving Julie in this network by making her the secretary of the association,” said François Laurence. “Since the president already knew that he liked working with her, he was open to the idea of Julie as a shareholder in his new group.”
Think About Taxes!
To take full advantage of the sale of your firm, our ex-owners agree that the main challenge is taxation.
Regardless of the type of transaction, planning is key. In addition, don’t hesitate to do business with trusted professionals. Notaries and tax specialists will help you find the best solutions depending on your situation. “For some brokers, it might be fiscally more attractive to sell their office, not just their client portfolio,” Jean-François Julien explains.
For many brokers, the selling of their insurance firm will be the last big transaction before a well-deserved retirement. Don’t hesitate to ask for help from an advisor at National Bank. They will support you throughout the entire process to ensure your business transfer is a success.
For brokers interested in buying out another broker or refinancing to purchase a damage insurance firm, Jean-François Julien mentions that National Bank offers a complete service for damage insurance brokers: “Of course, it all depends on the price expected by the seller, but we always welcome transactions that are profitable for our clients….”
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This article is offered by National Bank
