Selling an Insurance Company in South Florida

Insurance companies are in demand for buyers who qualify to purchase them. According to top-ranked Business Broker, Russell Cohen, insurance companies look for other insurance companies to acquire, especially those who match the client base of their existing policy holders.

I interviewed Business Broker, Russell Cohen, Murphy Business Franchise Owner and Florida licensed business broker about his latest business sales transaction which was for the sale of an insurance company called Florida First Insurance in the South Florida city of Pembroke Pines.Insurance Company Sold by Murphy Business

My first questions were: What is it like selling an insurance company and what makes purchasing this type of business unique?First Russell explained that not just anyone can become the owner of an insurance company. The purchaser of an insurance company must have what is known as a 220 insurance license.

During our interview it was clear that this sale transaction was an acquisition buy from the owners of an existing insurance company called Finney Insurance.

When a company buyers another insurance company what they are really buying is the “book of business” of the commissions to be earned by the renewal of the policies by the existing policy holders. In addition, the new buyer can market to these customers for the opportunity to sell more insurance products and to grow the commissions they will earn from the policies sold.

In this purchase, the buyer, figured out how to earn these additional commissions from this book of business while at the same time reducing expenses and overhead by closing the doors of Florida First Insurance Company in Pembroke Pines . The previous owner will continue to work for the new company over the next few years as part of the sales agreement.

It is beneficial to the new owners and to the existing customers if there is an acquisition in which the current owner stays on to help with the transition and to add new business for the new company.

The business was sold in a very reasonable amount of time -120 days and according to Russell Cohen, these type of acquisition of competitor companies is the fastest pathway to grown for insurance companies- by taking over the “Book of Business “ of another company.

When policies are renewed by existing customers, the new company that buys the book of business gets to receive the commissions. The new company now becomes the agent of record for those policies.

The insurance business of this company was 65 percent commercial and 35 percent auto and homeowner insurance policies. In the commercial insurance category there is business liability insurance, general liability insurance and worker’s compensation policies.

When asked what made this insurance company sales a smooth one, Russell explained that the existing insurance company was in their business location for six years. The transition and sale were not restricted because the seller of the insurance company had a lease that was month-to-month at the time of the sale so there were no lease entanglements or extra lease expenses with the sale .

Another factor that helped for a successful sale was that the buyer and the selling company were very well matched. The buyer specialized in a small corporate clients and small business owners.The seller and the buyer had a match that they were in sync with the kind of business they do and there was an in-sync- making it easy to merge the corporate cultures — find similar like agencies that want to merge and make the purchase — it helps for a smoother transaction and that the parties have a good, clear understanding of how this business segments operates and becomes more profitable, the strategies and goals can match and be in -sync-

Congrats to Florida First Insurance seller, Jonathan Rausch and buyer, John Finney of Finney Insurance. Both companies are members of the Independent Insurance Agents Association,Broward Chapter.

The motivation of the owner as to why they want to sell the business is a big factor in each sale. For this sales transaction we were told that the owner wanted to make life easier and to reduce daily stress of a 30-minute commute to the business for health considerations.

According to Russell Cohen, the business climate for selling businesses here in Florida is one of an active marketplace. He has sold 21+ businesses so fare this year. He reflected on international business matters which effect the economies such as in England.

Florida does have more visitors and residents during the colder months of the year and summer time can often be slower for business transactions than during those other times. Summer can and usually is a time when people take vacations ad travel so new deals happen less frequently.

Russell Cohen, Owner/Broker of this Murphy Business Brokerage in Davie, Florida shared, “ One reason why I am so busy right now is because the deals that I listed 6 months or more ago are now closing. I am getting new listings and good quality business inventory is coming on to the market. “

In case you are wondering what new businesses Russell has just listed, he just listed a SMOKE Shop which has — tobacco, vapor , and paraphernalia products. It makes about $135K/yr. and it’s on the market for $369K.