How young, aspiring brokerage owners can outflank the consolidators
With the older generation of brokers retiring, opportunities are abound for young brokers who want to buy into an existing independent brokerage, said panellists in Canadian Underwriter’s LinkedIn Live event, ‘How to become a young brokerage owner.’
“[Independent broker owners] are concerned about succession, and not everyone wants to sell out to one of the large consolidators,” said Alex Wong, partner at Smythe Advisory. “There is a lot of opportunity for younger entrepreneurial brokers who want to stay in that independent type of environment that can partner up with an independent broker owner who’s trying to figure out what that succession could look like.”
Relationship-building is crucial for young brokers who want to take the reins from an independent broker owner, especially if they’re competing with consolidators for the purchase.
“Odds are, if you’re competing just purely off of dollars…you’re not going to be able to outbid or out-pay one of the bigger consolidators,” Wong added. “Whether or not they are selling to a consolidator, whether they’re selling to you and you’re able to find financing, whether it’s from a bank or from other investors, they’re going to make good money regardless.”
But money isn’t the only consideration an independent broker owner may make when selling — especially if independence is important to them or if they want to find a like-minded buyer.
“It’s finding some of those independent brokerages that are looking for succession, and figuring out [a] non-financial aspect that you can bring to the table,” Wong said. “They may be willing to take a lower price if you can tick the boxes on those non-financial pieces.
Related: Did you miss “How to become a young brokerage owner” on LinkedIn Live? Register to watch it here on demand.
“It comes down to building those relationships with those [independent brokerage] owners and trying to understand their values. What’s driving their decisions? Can you check those boxes?”
Crystal Underhill, vice president of new business development at Reith and Associates Insurance, emphasized it’s important to “ask the question” around ownership or succession plans. “You don’t know the succession plan,” she said. “Perhaps you can be the succession plan.”
Every brokerage’s succession plan is different, emphasized Jennifer Savage, commercial and personal account executive at McDougall Insurance.
“If you are at a brokerage, and your plan down the road is to be a partner or manager or owner, have the tough conversations,” she advised young brokers who aspire to brokerage ownership. “Transparency is my Number 1 answer. Unfortunately, some brokerages don’t want to disclose their succession plan. But if this is what you want, you have to put yourself in a place where you see your future growth.”
Feature image by iStock.com/DNY59
