Whether an insurance agency chooses to secure its future through acquisition or helping a new generation of principals buy into the business, you'll need access to cold, hard cash to close the deal. Yet lending specialists and agency consultants warn that your local bank won't necessarily be eager to finance a perpetuation program–and even if the money is available, loans can be risky business.
"Many agents are often surprised when they go to their bank for a loan and have trouble," said Albert Lloyd, executive vice president for Marsh, Berry & Company Inc., the Willoughby, Ohio-based consulting firm.
"We're not surprised," he added, explaining that while agents and brokers know their firms are profitable, few banks understand this niche business, or have dealt with the intangible assets involved, which can scare them off.
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