NAPAA - National Association of Professional Allstate Agents, Inc.

usiness planning
KNOW YOUR EXIT STRATEGY:
Know Your Market (part 3 of a 7 part series)
By Ed Hogg
What are books selling for in your
area Have there been any recent sales If
so, do you know the seller to confirm the
sale price and terms Did the seller hold
a note Does your book have a language
requirement where the majority of your
clients speak Spanish, Vietnamese, Korean,
etc. If so, the value could vary depending
on how common the language
is in your area and the number of buyers
seeking a book with that language. Such
cases will likely require more research to
determine a proper value.
Have you checked the “for sale” listings
on NAPAA’s web site, Allstate’s
web site or those of the lenders who finance
Allstate books Whatever you do,
use multiple sources to determine your
book’s value, but don’t rely on your FSL
or Allstate to evaluate your book. While
Allstate wants you to sell to an eligible
buyer vs. taking TPP, they don’t necessarily
have your best interests at heart. Generally
speaking, once your book is on the
market, you’re of no value to your FSL or
management. They will probably want to
help facilitate the sale, or help to qualify
your buyer, mainly because their production
goals are dependent on new hires.
Once you decide to sell, management
figures you will slow down your production
and possibly downsize your staff to
keep expenses down. If that’s your plan,
you might want to reconsider. Don’t risk
changing the set up of your office, especially
staffing. Hold on to your staff until
your buyer evaluates their own needs. If
you terminate an LSP and your new buyer
wants that extra person, they may find it
challenging to staff up. Keep in mind that
Allstate wants new hires to have two or
three LSPs in place right away. Remember
that your ideas may not be the same as
your buyer’s. Let them decide.
So what has your Region been
allowing for past and recent
sales
Are mergers being allowed If so, this
will help you with an inside buyer (current
Allstate agent) and could cut your sales
time to as little as 90 days. Are books being
combined for a sale Some regions allow
books of varying size in the same area
to be combined and sold to a single buyer.
This option is mostly granted to outside
buyers, and is not generally available to
existing agents looking to merge – but
then again, it never hurts to ask!
Are splits occurring If your book is
under $800,000 in earned premium, you
are in good shape to sell to a buyer who
can start under the enhanced commission
program (3 year period). This is critical for
buyers seeking the beefed-up commission
option. If your earned premiums are over
$800K, you may be able to “split” your
book into two parts or more, allowing
your new buyer to qualify for enhanced
42 — Exclusivefocus Summer 2011