u/firenance

How many of you are actively using or considering using AI artifacts for deliverables or presentations? Any specific use cases willing to share?

Understandably if something will be handed over to a client it makes sense to keep it in a more ubiquitous format like word or ppt, but we are starting to more frequently build live or dynamic artifacts to use in delivering information.

Example: I have a basic assessment and benchmarking run through, and with the right intake and inputs it’s a fraction of the time spinning up the visuals in a live demo or printable format via a claude artifact vs pulling and populating ppt templates.

Louisiana.

Original Post: Aunt wants to challenge property I inherited from my dad

It took three months for my attorney to do an abstract (50+ years) and an answer for me, but they did come back with something.

A technicality or potential issue is that the bill of sale between my dad and grandmother specifically references her rights or interest in the property, and not her ownership interest in the LLC. The bill of sale explicitly says "All of seller's right, title, and interest which is declared to be . . ."

The property was titled and registered to the LLC at the time of the bill of sale, and the distribution event had not yet occurred. So there is a potential argument (to what my aunt has said) that the property was not hers to sell yet as it was owned by the LLC.

I've been told Louisiana is a "race-state" where if there is a recording then that title takes precedent. So the 2021 act of conveyance from the LLC to my dad is recorded, and the parcel is registered in his name currently.

Both of those two documents and recordings clearly state "No title examination was requested nor made by the undersigned parties"

The problem I now face is the attorney/notary is telling me their title insurance underwriter has said they will not sign off on a closing for this property with this discovery, unless the remaining heirs from my grandmother all sign a release stating agreeance that my dad has clear title . . . which my aunt will not sign. 4 of my dad's 5 siblings would agree, but one would not. For context this parcel is appraised near $200,000 so they are willing to push the issue.

The other problem I also face is my current attorney is also the one who signed as the witness to the act of conveyance from the LLC to my dad. What, if any liability, could exist there?

So while it could primarily be a real estate problem, I'm trying to figure out if I need to prepare for a probate argument with my aunt since my grandmother's succession is also still open, or if the fact it was conveyed to my dad under the premise he purchased the rights from her even if pre-maturely or "skipped" a step.

Edit: I can’t see any of the current comments, so I’m assuming they are filtered or not approved.

Curious if anyone else is seeing this.

Scenario 1 - Former clients who "fell in love" with the M&A process now trying to become our competition. I'm seeing it a few times per year now where people who sold, worked their earn out, trying to start sell-side firms. It's almost predictable now.

Scenario 2 - Large buyers, who want to pass on an opportunity they found direct, trying to broker the deal to their competitors. True story. I'm seeing it more and more where a buyer gets into DD, decide they don't want it, and now trying to back-door broker the deal to their competitors in exchange for a cut. A guy this week tried doing this to me, telling me he wanted a $100K referral fee for introducing a seller he took a pass on.

Everyone who gets a taste thinks M&A is easy large commission checks. They don't see the dozens or hundreds of hours we put into prospects for $0, working to build rapport over years. Or the massive E&O risks of advising people through this process. Geeze louise.

Sharing some current intel on the agency M&A market. Everything here is generalities, but current trends you won't see in press releases. I also won't cite multiples, because even within these segments there is a lot of nuance and "what ifs" that have to be answered. But some general intel on if you have an agency in this category, things to consider.

Size Matters

Always has, but many capital buyers are continuing to bump up their targets. If you are sub $750K revenue then PE buyers aren't as active. Your best bet is another local agency, and the offers won't be the same. Some PE buyers will play in this space, but the offers are super complex with low guarantees and pie in the sky earn out potentials. This has always been the case, but we're seeing less interest from larger buyers in that segment. >$750K-$1M, is typically where the interest remains. Majority of large buyers are open to >$1M EBITDA, so if you are $2.5M-$3M+ revenue, the market is dramatically different.

If you are a small agency, and want/need the best exit scenario, your primary objective is quality growth. Makes sense to increase the sale of an asset you should increase what makes it valuable, but for some reason people don't make that connection. If you are content with a handshake deal to turn over the keys with an agency across town, great, but don't expect a high sale price.

Medicare and Non-standard P&C Agencies are Super Limited

The population of buyers has dwindled tremendously over the last 12-18 months. Opinion? It's political. Any time there is looming administration change on health care or immigration, these can be volatile.

Medicare agencies are constantly facing changing carriers, comp rates, etc. so on a dime a successful agency can be at risk. Just this week a client, large FMO, learned their #2 carrier was pulling out of a territory and they were at risk to lose revenue on 2,000 policies unless they find a replacement this AEP. Buyers know that, and have only been offering low cash proceeds at close and significant rolled equity or growth earn outs. So when you only have a few options, and the options aren't great, it's hard to sell for a good price.

Non-standard is similar, in that there are only a handful of large buyers. Even large (>$3M revenue) non-standard P&C agencies are not getting good offers. So unless sellers have a motivation to get out, many are holding on. Small or local non-standard, practically your only option is selling to someone local or another non-standard.

Personal Lines is Getting Slightly Less Interest Compared to Last Year

Many large buyers are changing their buy-box criteria to focus on a minimum book mix, so unless an agency has a minimum of 30%-50% CL, many of the larger buyers aren't excited. That's not saying they aren't sellable, we still get great interest for good agencies, but when the buyer pool reduces that can be reflected in the offers.

This is an observation, but on average we are seeing offers for PL focused agencies around 10% less compared to last year for guaranteed proceeds. When you think about it, property rates in many states have slowed or even started to decrease, so the due diligence standards are also looking at this. Many agencies have floated on rate the last few years, and now the tide has turned. Having history of client count or PIF is more important, and if your revenue is stable but you've lost clients and policies, that's flag being discussed.

CL, or HNW, Holds Strong Interest

There are still nuances within that, but many capital buyers are focusing their efforts on agencies with 50% or more CL. Even though we still see strong interest in PL, on average we see almost double the amount of qualified inquiries for a CL focused agency.

Earn out Structures are Evolving

People know "you have to stay on for 2-3 years" to work out an earnout, but candidly recent history has proven that many sellers almost don't care about earnouts, or that's all they care about then completely check out. For truly competitive offers, buyers are focusing more on true perpetuation planning vs buying an owner out and giving them a short term retirement window. This is the rare exception, but have seen it, where some buyers are now tying earnout performance to staff retention (AMs and producers) instead of just the owner. Not everyone will adopt this, but I wouldn't be surprised if more do. So perpetuation of culture and why your agency can perform will be tied to things other than strictly financials.

EDIT

Diversified Agencies are Not Always A Good Idea

Agencies that offer derivative services like real estate, tax prep, bookkeeping, payroll, HR, etc. cause problems. Back in the day there used to be buyers for these, not anymore. They will be broken up if you want to sell.

Even as far as P&C PL and Medicare. As much as you feel they are complimentary, they aren’t. Different markets. Even things like group benefits and HR consulting. While complimentary not everyone who does group benefits wants HR consulting.

If you look at diversified larger agencies you can see one clear trend. P&C CL and group benefits can have some compliment. That’s it.

Focus on doing one thing, really really well, and don’t get distracted with other things.

As I'm saying this out loud and typing it, I know it's a personnel question rather than consulting one. BUT, typing out to gauge maybe other's experiences. In what ways are generational differences presenting themselves with modern tools?

Small boutique niche firm. We've steadily moved up market to compete with multiple larger firms in our space. We are still nimble and move on things quickly compared to some peers.

Within some parameters, we've given one of our younger senior analysts practically open road on a few AI tools for data cataloguing and analysis.

Frankly, what they've built is immensely impressive, never had access to this kind of data before, and will completely change our deliverables and market value.

Problem is surfaced however, is their reliance and overfitting on the analysis. The competing sentiments are "The data says X" and we are having to say consistently data is great, but just because an AI ingested 5+ years of information doesn't mean it knows everything.

Their tendency is the desire to put anything quantifiable into a report, and we are saying that TMI can be harmful and it's up the the advisor on how information is presented.

The sad part . . . multiple people internally have expressed that so much time spent chatting with Claude is having an impact on their critical thinking skills, and while super productive, it's coming at a cost of over confidence or extreme scrutiny of AI output. Weird times folks.

Have seen this question maybe a few ways, but just had a sobering instance.

Prospects using claude, chatgpt, or google AI summaries to ask for a valuation of their company.

As a niche firm, I’d say we have been the go to source for people knowing their market value. We even have solid SEO ranking and recently focused on AEO, which is working. BUT I’d almost say too good.

A prospect shared with me their AI google chat, the questions, and how it cited our articles to give them a range of expectations based on buyer type. It also summarized the common traps which could make those estimations more or less accurate.

Basically it hijacked our first sales call. Of course I had a few more discussion points about common deal structures, planning net proceeds, but like 80% of the usual first call we have with someone to discuss “Do those numbers make sense for you?” Was answered from google with relative closeness.

Thinking ahead but we already say our biggest competition is clients moving forward without us, and our experience says if they know what numbers to push for and a direct buyer is close they will try to DIY selling direct. We harp that people often get a better outcome working with us through the competitive process, but they don’t know what they don’t know.

Anyone else have similar experiences already? We already see several PRs of former valuations and opps selling without us. My guess is that’s about to increase.

WWYD? I feel like the whole situation is going to be difficult and harm either my marriage or friendship. Prob more relationship question but related to our kid’s sacraments.

Next baby is due in a few months.

Wife suggested a couple friend to be godparents. At first I said let’s keep thinking about it. I suggested another couple, who are good candidates, but I’m confident my wife will insist on the others.

I know things about them, in confidence that my wife doesn’t know, that I would not choose them.

They do attend mass, appearances, etc. that they would be candidates but they aren’t, and my friend trusts me not to tell my wife.

(Before anyone asks, I’m not divulging the reasons, but they are enough that I wouldn’t choose them as godparents).

I feel like my primary option is tell my friend and ask him to decline if my wife mentions it to them. But I’m not sure how he will take that. We have talked about the reasons, but it was never in this context and I know he would be hurt if I said he can’t be a godparent to my kid.

Not worried about his feelings, but this could have ripple effects in our friend circle.

Edit: everyone suggesting I tell my wife. I don’t trust her to maintain their confidence. She has a history of gossip via “asking for advice” and will tell other people. I guess that answers it in that if she pushes for them as godparents I will have to risk their friendship.

Edit 2: also reminded why I don’t post here often. Some of you need to read comments and self reflect before commenting. Redundantly saying what others have commented isn’t helpful.

Idk why but just want to say this out loud. Ball demo videos for bowling are boring, but it’s the most impactful way of marketing.

Strike after strike during a match is exciting because at any point it’s waiting to see if someone makes a mistake and there are consequences.

But demo videos? Continual just showing strikes without stakes? UNLESS they are demonstrating in the same video different patterns, releases, versatility of the ball, etc. imo they are all the same.

Life is overwhelming but it’s understood it’s a season. My oldest is big enough to start noticing me and my spouse always tired. I could rant about the dynamics but my main question is when you are struggling to keep up how do you stay engaged with your kids?

I’m starting to understand where people are coming from saying their mom was always tired, their dad always worked, yada yada.

Looking back I now recognize my parents masked a lot of their stress from us, but my dad also died relatively young from a stressful life.

Here is a no frills, no holds barred, run down on what to expect when considering to sell your agency. This is a longer bulleted guide, but happy to continue any specific conversation in the comments.

1. Always talk revenue because size matters.

Premium is vanity. Financials are about revenue and margin.

Why is this?

• < $400K revenue agencies will 90% of the time be a book purchase.
• &gt; $500K revenue can merge well with other local agencies.
• &gt;$1M+ revenue gets the attention of PE or strategic buyers.
• &gt;$1M+ EBITDA is a target for PE buyers and where real competition begins.

2. Size also matters for agency valuation, and likely buyers.

In general smaller agencies have more volatile margins while larger agencies tend to have more predictable performance. Agency valuation is no more than math and comparable data (key word is comparable) to determine what a willing and capable buyer would likely pay in a market process.

• < $400K revenue agencies is the tipping point where owner salary, "owner perks," and margin performance is a gray area. It's often worth more as retirement/lifestyle income to the owner vs selling, unless they have other assets or retirement savings.
  • Special note: Most reputable M&A firms don't work with agencies in this category because it's harder to sell a small agency than a larger one, and the fees are usually more than a seller will want to pay. Some will if they know there are qualified buyers in the area.
• &gt; $500K revenue is the tipping point where an owner/manager can sell, still get a $100K income as a key producer, and get a decent buyout.
• &gt;$1M+ revenue is point #2 at scale.
• &gt;$1M+ EBITDA is means you are in the top 15% of agencies and you can demonstrate successfully running a business. At this point it's about money and talent.

EBITDA Multiples are Relative to Size, Growth, and what a buyer can afford.

https://preview.redd.it/ppbbax4k9a6h1.png?width=1024&format=png&auto=webp&s=cfa2d28119397cbb2ef1f3e2a097cc04e8afb524

​2.2 EBITDA is not the same as Seller Discretionary Earnings (SDE)

• EBITDA = Earnings before Interest, Taxes, Depreciation, Amortization.
• Agencies are not valued using Seller Discretionary Earnings (SDE).
• Any bank cash flow underwriting and certified valuation report will include a normalized owner/operator compensation.
• Taking out the owner's salary/comp is not accepted by savvy buyers, as there exists a need for admin or management oversight in an operation.
• For context, the SBA requires a fair market compensation for a manager to be considered as a reasonable factor in a certified valuation required for SBA lending.
• A pro forma, normalized EBITDA, is about measuring the reasonable operating profit of the agency as a going concern. Which means no major disruption to the operations.
  • If the owner/manager "isn't needed" then the risk is higher and multiples are lower.
  • If an owner is absentee, that often means there are competent and successful management to run day to day operations. This is different than the above point.

3. Don't bring a knife to a gun fight. Hire experts.

Too many people try to DIY selling their agency thinking they can handle it or to save money on transaction costs. I normally answer the objection by asking "As an independent agent you tell insureds it's better to work with an independent broker who knows the market and options vs quoting with a captive carrier. Selling your agency is no different. Negotiating directly with one option, without expert support, instead of a competitive process, puts you at a huge disadvantage."

• If your pet is sick you go to a vet.
• If your pipes are backed up you call a plumber.
• If you run a business you hire a CPA for taxes.
• If you get in legal trouble you hire an attorney.
• You tell insureds to hire an independent broker to handle their policies.
• But for some god-forsaken reason people are allergic to hiring M&A advisors thinking that paying a commission costs you money.

Here is a reality for most people negotiating with direct PE buyers:

• They (buyer) have an M&A lead, a team of financial analysts, and a team of attorneys who specialize in M&A.
• You? To save money you hire a local attorney who doesn't do M&A for the cheaper hourly rate, and only tell your CPA when a transaction is close to being done because you know you'll owe a lot of taxes.

What can dramatically change your outcome?

• Be prepared with accurate info, clean financials, and agency data.
• Work with an M&A advisor to learn your options and have a comparable team (negotiating, financially preparing/presenting data, legal, etc.) fighting for your goals.
• Involve your CPA and financial advisor early to PLAN for major cash and tax events instead of being reactive.

It's no secret that direct buyers (and unsavvy buyers) will start low and negotiate if you push back. Working with professionals they know you are talking with other buyers and will "sharpen their pencil" at the start. No different than you telling a commercial underwriter to put their best offer first.

Data shows represented deals in a competitive process often yield 25-30% more than direct buyer offers. Depending on the size, this is easily a 5-10x return on the success fee at close, and often covers majority if not all tax differences.

4. Transaction type matters, state matters, plan for net proceeds.

• %+ of agency transactions are asset purchases.
• Asset purchases are in large categorized with long term capital gains when structured properly.
• The rare occasion of a stock purchase is usually when a seller is a C-corporation and the buyer is open to it.
• Be sure to understand your state income tax and other cap gains tax considerations.
  • States like NY, NJ, CA, etc. with high state income tax rates can be BRUTAL for sellers . . . even with the bulk of the sale allocated to capital gains treatment.
  • Also where size matters, as once you factor in taxes owed, any transaction costs (legal, CPA, advisors, etc.).
• Have a target number in mind, net of transaction costs and taxes. Work with professionals to see where your agency fits in the current market environment, likely buyers, and expected net proceeds.

https://preview.redd.it/5ukxl40q9a6h1.png?width=576&format=png&auto=webp&s=9cf7c79ace55d71502f209b826ec4a67bfa188f4

​5. The process takes time, and only works well when you are prepared.

Deal timelines typically fall in these ranges:

• Prepared sellers and savvy buyers can go from intro, offer, negotiation, due diligence, and legal to closing within 90-120 days.
  • Well oiled machines and super prepared can be quicker, but don't bank on it.
• Not being prepared, or hiring advisors who aren't experienced with agency M&A can drag out timelines and often take 120-180 days.
• Just testing the waters, not having data, can more often than not drag out a process to more than 6 months which often leads to burnout for both parties, and lack of confidence in being able to close a deal. Many buyers walk away if you are working on info or data for a long time and not ready to sit at the table.

6. Deal terms are critical, read the fine print, and ask every question you need.

• Non-competes are enforceable for sellers/shareholders of companies. Don't go into a deal with the mindset that you are looking for loopholes. Reasonably participate and expect you will need to follow rules.
• Understand cash/guaranteed proceeds and any equity issued at close. Buyers love to push equity as it reduces cash outlay, and it's delayed payments often with special rules. If you take equity in any deal ask for copies of prospectus, internal valuations, examples/evidence of internal transactions, or the mechanisms to which you can sell those shares.
  • It also ties to your earnout and non-compete, as leaving early could forfeit shares.
• Understand the earnout terms. Most buyers will place earnout qualifications with stretch goals that may not be reasonably reached by sellers. Know your own history, performance, capabilities, and what you can achieve. A good M&A advisor can help you also understand those terms and potential expected performance marks.

Edit: I tried updating the images and for some reason it blitzed the original post and I had to retype a few things.

I work in consulting, and very focused industry niche. I joined an association a few years ago that was for consultants. For the first time I attended the annual convention and feel so seen.

It’s amazing to be in a room of 20+ people discussing technicalities about what we do, and for the first time in a long time I had a host of people I could sit and ask intellectual questions about my career.

Better than drugs.

My advice to younger ones who are still learning life, don’t shy away from finding social situations that could be valuable for you. It’s easy to close in on yourself and seek self learning, but there’s something to be said about sitting at a table with someone who has been in your shoes and can teach you lessons.