Home › Factors That Affect the Value of a Book of Business for Sale

Buying an insurance book of business for sale can be a great way to increase your revenue and expand your business. But before you finalize the deal, you’ll need to determine its value first. The value of a book of business will depend on various factors, including the current owner’s sales, the buyer’s sales, and the current owner’s net profit.

But there are other factors you should consider, including the book of business’s profit margin and the current owner’s background, experience, and sales ability.

Many factors affect the value of a book of business. To understand this more clearly, we have summarized them into two questions that you should be asking about before the acquisition.

happy family and insurance book of business for sale

Questions to Ask Before Buying a Book of Business

How Much Income Does It Produce?

This factor is the most important in determining value. How much income does the book of business generate currently? How much will it generate in the future? How much will it generate even if the current owner doesn’t increase their sales?

Although the book of business’s current profit margin will affect the value, this is usually less important than the book of business’s profit potential. The profit margin is already factored into the book of business’s value. The higher the profit potential and the bigger the market base, the more valuable the book of business.

In addition, this information can be difficult to determine at the time of the sale; therefore, you’ll want to prepare yourself for any potential surprises. So, before you finalize the deal, you must know the answers to these questions.

What’s the Product Mix?

The product mix is the second most important factor in determining the book of business’s value. Does it only offer one product? Or does it offer many? There can be many insurance products that an agency can sell, including personal insurance, property and casualty, commercial insurance, fidelity bonds, and general liability insurance.

These are all different types of insurance, and they require different amounts of sales and marketing experience. A book of business with little or no product mix will be less valuable. On the other hand, if the book of business offers many different types of insurance, a buyer will have more options to build a successful marketing strategy. In this case, the book of business will likely be more valuable.

writing on insurance contract and insurance book of business for sale

Planning to Buy an Insurance Book of Business for Sale?

Finding an insurance book of business for sale can take so much of the time and effort you need to pour into your current business. Here is where we at Energia Consulting Partners LLC come to help. Our team of insurance specialists can guide you through this tedious process. Call us today to schedule a consultation.