IT’S NOT ABOUT GIVING UP CONTROL

Creating options, protecting value

and caring for the people who rely on you

By Carey Wallace

Perpetuation planning is a big idea with a simple meaning. It is your family’s peace of mind. At its core, perpetuation planning is about deciding what will happen to your agency when you are no longer running it. This could be because you want to retire, slow down, pursue something new, or because something unexpected happens.

Perpetuation is not just about selling a business. It is about making sure your agency can continue, your clients are taken care of, your employees are protected, and your family understands what to do when you are no longer at the center of everything inside your agency.  

Many agency owners spend years building a strong book of business, a trusted team, referral partner relationships, carrier relationships and a strong network, but never stop to plan for the day they will inevitably step away from the agency. Taking the time to outline a perpetuation plan gives structure to that future. It creates clarity instead of confusion and options instead of pressure.

Without a plan, decisions are often rushed, employees get nervous and may choose to leave, customers may follow the lost employees and carriers will become concerned. Quickly, value is lost and an enormous amount of stress will be placed on the people you care about most.

Early stages and steps

The first step in creating a perpetuation plan is understanding what you want. This means taking time to think about your personal goals and your business goals. Some owners want to stay involved part-time for years. Others want to leave completely once they are no longer in charge. Some care most about keeping the agency independent or protecting the customer experience that they have created, or the employees who helped them build the agency, while others focus on maximizing value and the price the agency can command. There is no wrong answer, but being honest with yourself is critical. Your personal and professional goals will shape every other part of the plan.

The next step is understanding where your agency stands today. This includes looking at financial performance, revenue stability, client retention, carrier relationships, and how dependent the agency is on you personally. Many agencies rely heavily on the owner for sales, carrier communication, and key client relationships. This can make perpetuation difficult. Understanding these gaps early allows you to mitigate the risk to the future operation of the agency over time instead of being forced into a situation that is not ideal because you didn’t take the time to plan.

After that, you begin to explore perpetuation options. This may include selling to a family member, transferring ownership to key employees, creating an internal ownership group, merging with another agency, or selling to an outside buyer. Each option has trade-offs. Internal perpetuation may preserve culture but take longer and require financing. External sales may happen faster but require more preparation and negotiation. A good plan does not lock you into one outcome but gives you flexibility.

Once a path is identified, the real work begins. This stage focuses on building leadership, documenting processes, and creating systems that allow the agency to operate without you. Strong teams and clear workflows reduce risk and increase value. This is also where many owners begin to slowly step back, allowing others to grow into leadership roles while still having guidance and support.

The right advisors are critical throughout this process. A CPA can help with financial planning and tax strategy. An attorney experienced with insurance agencies can help structure agreements properly. A valuation expert can provide realistic expectations and identify ways to improve value.

Involving your financial planner can help you weigh your options and align the agency’s perpetuation plan with your personal financial goals. A consultant who understands independent agencies can help coordinate these efforts and keep the plan moving forward. The right advisors help you avoid costly mistakes and give confidence to all parties involved.

A perpetuation plan should never be static. It should be reviewed regularly, ideally every one to two years. Lives change, market conditions shift, and agency performance evolves. Regular reviews ensure that the plan still makes sense and remains aligned with your goals. A plan that is reviewed often is far more likely to succeed than one that sits untouched in a file drawer.

Challenges and pitfalls

There are many pitfalls that can derail perpetuation planning, and understanding them is just as important as understanding the steps. One of the most common pitfalls is waiting too long to start. Many agency owners believe they have more time than they do. Years pass quickly, and suddenly the owner is tired, burned out, or facing health issues. At that point, options become limited. Buyers sense urgency, internal candidates are not ready, and value suffers. Starting early gives you control and time to improve outcomes.

Another common pitfall is assuming family members or employees want to take over the agency without having clear conversations. Owners often believe a child, partner, or top producer will step in, only to learn later that they are not interested, unable or unwilling to take on the financial responsibility or are not prepared to step into a leadership role. Avoiding these conversations can lead to disappointment and broken relationships. Honest discussions early on help set expectations and allow time to develop or adjust plans.

Overestimating agency value is another frequent challenge. Many owners believe their agency is worth more than the market will support. Emotional attachment and years of hard work can cloud judgment. When expectations do not match reality, owners may reject good offers or delay planning altogether. A professional valuation helps ground decisions in facts and shows what can be done to increase value over time.

Including a valuation process in your plan that will move and shift with your agency is ideal. Those that include an antiquated valuation method or even a set dollar amount in their perpetuation plan may create opportunity for great loss especially if the perpetuation plan is not reviewed regularly.

A related pitfall is underestimating how much preparation is required. Perpetuation planning is not a single transaction. It is a process that often takes years. Developing leaders, cleaning up financials, documenting procedures, and reducing owner dependency all take time. Owners who expect a quick solution are often frustrated when they realize how much work remains.

Some owners do create a plan but never take action. They may have documents in place or ideas discussed, but no real changes occur in the business. Leadership is not developed, processes remain informal, and the owner continues to do everything. A plan without action provides a false sense of security as that lack of follow through may force an external sale at a lower price or exclude the opportunity for an internal transition.

Another major pitfall is failing to reduce owner dependency. When clients, carriers, and employees rely solely on the owner, the agency becomes risky. Successors and buyers want to see a business that can operate without one person. Owners who do not intentionally shift relationships and responsibilities often find their perpetuation options limited or discounted.