Perpetuation Column: the Dangers of Perpetual Succession Planning

The third in a regular series of articles.
July 9, 2019

Welcome to the third in a regular series of articles aimed at educating PIA members about agency perpetuation and succession. This column is penned by Al Diamond, president of Agency Consulting Group, Inc.

Al is working with The PIA Partnership to help bring Agency Journey Mapping to PIA members across the country. Agency Journey Mapping is a seminar series developed to help agents better understand agency perpetuation/succession so that they can prepare a written plan for their agency’s future. Stay tuned over the coming months to learn how you can attend a live seminar near you or view Agency Journey Mapping on-demand. In the meantime, enjoy this article.

When planning for the internal perpetuation of a family owned agency, aka succession planning, a fine line needs to be walked to ensure that the new agency owner(s) does not agree to a payment schedule that it cannot maintain without robust agency growth or that goes on for too long because it is tied to the longevity of the seller. These are real problems that are exacerbated by factors the buyer cannot control, such as increasing life expectancies. This article discusses specific strategies that buyers and sellers can use to create a succession plan that ensures everyone is treated fairly and increases the likelihood of the agency operating profitably so that it can continue to make succession payments into the future.

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