This article is a Magazine Supplement for the February issue of the Insurance Journal.
The market for block transactions in individual life insurance and financial services has been off kilter for years. Demand is strong but supply is sparse.
Even so, the ground rules of acquisitions still apply. Buyers must do a diligent evaluation, despite the temptation to rush into the deal because opportunities are rare. Are the income multiples proposed reasonable? Can the seller transfer their customer base smoothly to the buyer? Sellers also need to do their due diligence. Does the buyer's profile fit their business philosophy, their market and their typical customer base?
Value multiples have changed little in recent years, but can become elastic, depending on how each party interprets the transaction. The negotiation stage may be difficult at times, but the main challenge is procuring financing. Our sources say that many lenders are willing to finance a transaction only if the buyers can provide collateral other than a book of business, such as financial or real estate assets.
Whether you are a buyer or a seller, the Individual Life Insurance and Financial Services Clientele Value Index is designed to make your search process easier. Good luck!
