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Allstate Insurance Agency with 498 Active Clients

CASH FLOW
$114,545

Specifications

  • Price
    $290,000

  • Cash Flow
    $114,545

  • Revenue
    $184,303

  • Profit Margin
    62%

  • Equipment
    $7,500

  • Lease
    $1,089

  • Down Payment
    12.5%

  • Employees
    2 - 1099 employees

  • Multiplier
    2.10

  • Reason for Sale
    More time with family

  • Location
    Omaha, Nebraska

  • Industry
    Professional/Business/Financial

With a location which has served Allstate clients for 45 years, this Agency is an extremely lucrative business. Being in the Top 2 zip codes relating to Allstate rates, the business is growing continuously. Many benefits are available to a new Allstate Agent including an Executive Advantage Program, which can cover 50-75% of direct mailing marketing cost and give the owner an additional $7,000 for marketing. One further opportunity is an enhanced commission program which would give a new owner an enhanced commission bonus starting at 35% for the first 4 years to help offset debt payments.

 

This Allstate Agency serves a prime market in Omaha which is expecting major growth in the next 5-10 years. The insurance policies are split 90% Home and Auto, 5% Business, and 5% Life/Retirement. With two well qualified 1099 employees, clients know that they will be taken care of. One employee is an insurance agent with 45 years of experience. The other employee is primarily responsible for sales. Of 2015’s $184,303 in sales, 65% ($120,000) were annual renewals of previously held policies.

 

The seller is looking to devote more time to his family and wishes to use this money to invest in other areas. He currently runs this agency from a distance, only investing time in an administrative capacity and when policy holders require his assistance. Growth opportunities are present for a new owner by adding agents to take advantage of the enhanced commission by expanding the business.

 

A down payment of $36,250 will yield a buyer a $69,238 Profit (NOI) in the first year, which is a 191% return on the initial investment. With the generous programs from Allstate, there is potential for profits to be greater.

Location

The business has been under the current ownership since 2012. The location has served Allstate Clients for 45 Years.

It is located in the Top 2 Zip Codes for Allstate Rates. The walk-ins and call-ins that the business receives are highly qualified prospects and are usually home owners.  It is also in a very busy shopping center located next to Tiburon Golf course so there is a lot of traffic.  This area is growing; there are a lot of schools and neighborhoods being built surrounding the location.  The master plans show a lot of growth in this area of Omaha in the next 5-10 years.

They are currently operating Monday – Friday: 9AM – 6PM, Saturday: 9AM – 1PM and closed on Sundays. The facility is fully furnished with desks, chairs, and computers.

This Agency is able to service both Nebraska and Iowa. The business is occupying a space that is 822 sq. ft. at $1,089/month; there is enough space for 5-6 staff should a buyer look to expand.

Allstate's Roles in Marketing

Allstate helps tremendously with Marketing.  A new agent will have the opportunity to enroll in a Marketing plan that provides a great cost share program.  Most of the time Allstate will help cost share 50-75% of total marketing costs for direct mailings, etc., a great program for the agent. 

Allstate also has an Executive Advantage Program which essentially a pre-loaded credit card to help with marketing.  For example, this current location’s 2016 allocation was over $7,000, needless to say the owner did not spend a dollar of their own money on marketing.  This is the biggest advantage of being a captive agent vs. being independent.  By adding in local and national advertising as well as a social media team keeps the phones ringing with prospects. 

Financials Highlights

  • List Price: $290,000
    • Industry standards dictate that valuations of Allstate agencies use revenue and a multiple of 2.1 to determine the list price. This is due to consistently high profit margins for Allstate agencies in comparison to independent agencies.  However, the owner is motivated to sell and the price has been reduced by $97,000!

  • 2015 Gross Sales of $184,303

  • 2015 Cash Flow of $114,545

  • 62% Profit Margin

  • $7,500 worth of assets included in the purchase
    • 2 Desks, 2 Desk Chairs, 4 Client Chairs, 2 Laptops, 2 Printers, and Other Office Supplies

Services & Clients

This Allstate Agency has a policy portfolio that is 90% home & auto, 5% business, and 5% life & retirement.  They are servicing clients in Nebraska and Iowa.  They have a demographic that spans in a large range of age groups as they are able to offer and provide a multitude of policy coverages.

Cash Flow Analysis

Description of Financial StatementP&L StatementP&L StatementP&L StatementP&L StatementNotes
2015201420132012
GROSS SALES$184,303$218,240$228,532$236,915
Net Income Shown on Financial Statement$114,545$139,271$144,540$136,153
ADDBACKS
TOTAL ADDBACKS$0$0$0$0
Seller's Cash Flow = Total Addbacks + Net Income$114,545$139,271$144,540$136,153
Profit Margin62.15 %63.82 %63.25 %57.47 %

Though when reviewing the Recasted Cash Flow you may see a decrease in Sales, it is important to note that the Profit Margin has actually increased and remained the same. This is because the business is maintaining less expenses making the business a leaner company.

A word from the Seller on Allstate’s enhanced commission: “It is on a 4 year decreasing scale.  I have participated in this 3 times in my 8-year agent career (I have purchased 3 books).  In my opinion this is the best enhanced scale in the industry and can allow an agent to pay off all debt within 4 years and have positive cash flow starting in the first year.

Staff Information

There are 2 - 1099 Employees currently at the business.

  • The Agent, which is the previous owner is employed and has 45 years of experience handles operations and all service inquiries
  • The second employee is a Sales employee which handles quotes and sales of new policies. 

The current owner is responsible for administrative items and handling client concerns when the staff cannot address them.

The business could grow by hiring callers to seek new clients. The business also could expand by taking advantage of enhanced commission which is readily available to be done. 

Valuation Details

The Firm Business Brokerage used an Industry Standard Valuation methodology to determine the Purchase Price of the business.

The formula used is as follows:

Revenue         x          Prescribed Multiple*                =           Fair Market Value

With this information, the computation is as follows:

                                                $184,303         x          2.1       =          $387,036

The Fair Market Value found above positions the business for a List Price at $387,000.  List Price has been set at $290,000.

*Industry standards dictate that valuations of Allstate agencies use revenue and a multiple of 2.1 to determine the list price. This is due to consistently high profit margins for Allstate agencies in comparison to independent agencies.  However, the owner is motivated to sell and the price has been reduced by $97,000!

Funding Example

Purchase Price:                                $290,000

12.5% Buyer Down Payment:          $36,250

      12.5% Seller Financing:                   $36,250

75% Bank Loan:                               $217,500

Seller Financing 5 -ear term at a rate of 4.50% equals a monthly loan payment of $676.

Bank Loan 7-year term at a rate of 5.25% equals a monthly loan payment of $3,100.

After business expenses and annual loan payments of $45,307 a buyer would retain a net operating income (profit) of $69,238.

Please note that the decision of whether to extend a loan on any particular sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available. 

Purchase Price:

$290,000

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Bank Loan Needed: $

Years
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Funding Details

Business:

Offer Price: $

% Buyer Cash Down at Closing: $

% Seller Carry Back via Promissory Note: $

year term at a rate of %

% of Purchase Price secured by Buyer and Seller

Total Bank Loan Need: $

% of Purchase Price

Desired Loan Type:

Desired Bank Terms: year term at a rate of %

Total Business Assets, Inventory, and A/R: $

Total Undercollateralized Loan: $

Loan Payments

Monthly Payment to Bank: $
Yearly Payment to Bank: $
Monthly Payment to Seller: $
Yearly Payment to Seller: $
Total Monthly Debt Service: $
Total Yearly Debt Service: $

Conclusions

Fixed Charge Coverage Ratio

The bank will require a minimum ratio of 1.5 to be lendable.

Cash Flow:
2015 Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2015 Cash Flow
$
Annual Debt Service: -$
NOI:

Buyer's Return on Investment (ROI)

The rate of return on the Buyer's down payment.

Down Payment: $
NOI:
ROI: %

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