Live Oak Bank – Determining Shareholder Ownership in a Multi-Partner Insurance Agency

Owning part of a large, multi-partner insurance agency has many complexities. Often as owners retire, new partners enter the ownership group. In perpetuation scenarios, partnership groups typically have lively discussions about the allocation of ownership. Consensus is a MUST for long-term success. Partners must value each other’s strengths and recognize the necessity of revenue plus management to increase the value of the agency.

So how do groups determine ownership allocations? Is it simply based on producer revenue? What about all of the other elements driving the value of a sizable agency? Down payments are often “pass the hat,” so are ownership percentages simply based on the amount of the check?

The ownership structure can be based on many factors that recognize the different facets and responsibilities of owning a multi-partner insurance agency. Production is a key value driver. The revenue from a partner book of business is a strong factor. There are other key value drivers, too. Consider a matrix approach to determining ownership shares. It may be appropriate to weigh some factors more heavily than others. Here is a tool to get the discussion underway.

Download Worksheet Here!

Kelly Drouillard is the General Manager of Insurance Lending at Live Oak Bank.

Reach her at Kelly.Drouillard@LiveOakBank or 913.980.7773.