Brokerage succession. The future is closer than you think.


If you’re a baby-boomer like me, you are probably thinking about and preparing for retirement. Even if it’s 10-years away, it will be here in a flash! If you’re the principal at a family-owned brokerage, you have the added task of speculating what the future of the brokerage will look like before you hand it over to the next generation.


If your brokerage is being passed onto a family member or purchased by an existing employee, you should start developing your successor today, so they have time to become comfortable and qualified to take over after you’re gone.

Heavy is the head that wears the crown

Ideally, choosing and mentoring your successor should begin a decade or more before retirement. With any corporate transition large or small, things don’t always go according to plan. For example, if you’re selling the brokerage to an existing employee, they may encounter problems with financing or decide, “it’s just not for me.” This forces you to start over and by this time 2-3 years may have passed which may postpone your planned departure date.

In addition to time already spent and time that will be spent formulating a new succession plan, another problem you may come across is lack of industry talent. Many baby-boomer brokerage principals and commercial lines managers will be retiring in the next decade. There may not be enough qualified candidates in your region with the skills or financial backing to take on a brokerage.

If you do have a family member interested in taking on the brokerage, you’ll still have to formulate a vetting process to make sure they’re the right person for the job. Another “it’s just not for me” conversation, especially coming from a family member, may cause hard feelings or jeopardize a stable family dynamic.

While this is all taking place, the day-to-day operations at the brokerage are still happening. Existing clients need to be taken care of and prospecting new business is still a priority. You can’t even gear down to part-time time because there’s just too much going on.

If the brokerage is flourishing, you may be faced with a choice—sell it internally for a discounted price or entertain offers from external people or organizations that are willing to pay your asking price, maybe more.

The M&A game

Mergers and acquisitions are the #1-way commercial brokerages grow in Canada. They see value in taking over an established brokerage because they don’t have to:

The mergers and acquisitions game can be very attractive to brokerage principals, especially when a successor cannot be found internally. If the potential buyer is a national brokerage for example, they already have experience in succession planning and rolling-over the business, which allows the transition to take place quicker and easier.

If you’re offered a phase-out, that is staying on in a limited capacity, try to spend most of that time transitioning clients. Many of these clients may have been with the brokerage for years and it shows that you still care about their business and their concerns surrounding the transition. That is client retention money cannot buy.

How do you prepare for transition?[1]

  • Establish clear but flexible timelines to help keep you on track.
  • Set milestones for achieving goals and objectives.
  • Keep the succession plan up-to-date to reflect any changes or decisions.
  • Review and modify your plan at least once a year as things change quickly in the business world.
  • Prepare a communication plan for notifying your successor, employees, suppliers and customers of your succession plans.
  • Seek professional advice.

Leaving your legacy

Never forget that your legacy is much more than your name on a sign or a business card. The new owners whether internal or external, have the prerogative to change the name of the brokerage or anything they want because it’s no longer yours.

So, before you have “gone fishing” for good, don’t forget that the legacy you leave has little to do with endorsing a logo or brand, and a whole lot with the quality of business relationships you’ve spent a lifetime building. I hope your successor, whoever they are, are worthy stewards of that.


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Topics: E&O, Commercial_lines, revenue, succession planning