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#2 Stock: 5 ways insurance agency owners can make money after a sale

Updated: Feb 19

There are typically five financial components to selling your business.

This means there can be five ways to create value when selling your insurance agency. 

  1. Cash at close

  2. Stock at close 

  3. Ongoing salary 

  4. Commissions

Every offer from a buyer is going to be structured differently. 

Understanding each financial component will help you determine the total value of the offer you are getting.  

In the dynamic landscape of insurance agency acquisitions, sellers often find themselves presented with a unique opportunity – the chance to maintain equity ownership in the acquiring company through stock options. 

While the traditional route of upfront cash consideration may seem appealing, exploring the benefits of owning stock in the acquiring company can be a game-changer for insurance agency owners.


What is the value of stock when selling my insurance agency? 

You become a shareholder of the acquiring business (the buyer). 

Accepting stock means you become a shareholder in the acquiring company. The number of shares you receive is determined by the agreed-upon valuation of your business. Equity in the acquiring business ensures that you can participate in the company's journey, sharing in its successes and growth.

There is an opportunity to create future value from the acquiring business’s growth.

Stock ownership allows sellers to benefit from the acquiring company's growth initiatives. As the business expands through strategic efforts and acquisitions, the value of the stock has the potential to appreciate, contributing to the seller's overall financial gains.

 It's worth noting that many sellers have experienced substantial returns through stock appreciation post-transaction. While this outcome is not guaranteed (and can vary based on market conditions and the performance of the acquiring company), numerous sellers have witnessed their initial investment in stock yield greater returns than the upfront cash consideration. 

Stock creates alignment between buyers and sellers.

By holding stock in the acquiring company, sellers align their interests with the long-term success of the acquiring business. This shared commitment fosters collaboration and mutual benefit as both parties work towards common goals.

Before accepting stock, conducting thorough due diligence on the acquiring company is critical. It's important to carefully evaluate the terms of the stock offer and consider your financial goals, risk tolerance, and confidence in the acquiring company's future performance. Consulting with financial advisors, legal experts, and business valuation professionals can help you make an informed decision.


Legacy Advisors is the only M&A advisor comprised of previous agency owners dedicated solely to sell-side insurance deals. 


Schedule a call with us if you are curious about what a sale could look like for you. We can answer your questions, advise on market trends, and discuss ranges for what a buyer might pay for your business.

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