Overcome Financing Obstacles

In This Issue

R. Gregory Nicholas
York, PA

"I have financed two agencies with PPCLOAN and would highly recommend them. They are knowledgeable, friendly, and get the job done."

Resources

AllstateForSale.com

Allstate Agency Value Index

PPCLOAN.com

Volume I, Issue VIIII

Greetings!

Welcome to the January edition of Allstate Management Monthly! We are off to a strong start in 2011 and look forward to continuing to work with you. This edition of Allstate Management Monthly features three key items:

1) A breakdown of inside buyers vs. outside buyers

2) Value Index results which were released this week

3) Typical financing obstacles we see on a day-to-day basis

Our team at PPCLOAN is eager to share this knowledge with Allstate managers and encourage you to utilize our resources to your benefit.

Inside vs. Outside Buyer- Surprising Results

Providing financing for existing Allstate agents (as opposed to outside buyers) is typically preferred by lenders as the existing agent has a dependable track record which the lending institution can base their decision on. Surprisingly, however, PPCLOAN's primary recipient of financing is the outside buyer which constitutes over 63% of Allstate agency funding. We want Allstate managers to be aware that we have plenty of funding available for Allstate agents and a strong program for outside buyers. Direct agents to PPCLOAN for a free consultation regarding their request!

Value Index Results

The theme for the 2010 4th Quarter Allstate Agency Value Index (released today) is "continued stabilization". Sign up to see the full report and how the market performed in your state. Once you have registered, you will receive quarterly email updates as each Value Index report is released.

Jumping the Hurdle

It is helpful to be aware of the primary financing obstacle we encounter when analyzing an Allstate transaction so that you and your agents can clear this common hurdle. A lack of sufficient monthly cash flow is the number one issue agents face when seeking to purchase an Allstate agency. The issue usually arises when these factors are present: high personal cash flow requirements, excessive purchase price, small Agency size, and large overhead expenses. The potential buyer should seek to minimize personal debt and other monthly obligations, negotiate a fair purchase price which can be supported by a conservative estimate of the future revenue stream (not-including bonus), and seek consultation on methods to minimize agency overhead items without giving up associated revenue.

January Deal Highlights

Outside Buyer in GA - Purchased and merged two Agencies totaling $2.48 EP for 1.73x. PPCLOAN provided $440,000 for 100% of the purchase price and $15,000 for working capital and transactional costs.

Outside Buyer in TN - Purchased and merged three Agency locations from single buyer totaling $3.47 EP for 2.2x. PPCLOAN was able to provide $710,000 toward the purchase price with the remaining balance being met by a $26,000 cash payment by the borrower and $50,000 of seller financing.

Outside Buyer in PA - Purchased a $3.27 EP Agency for 2.53x. PPCLOAN was able to provide $700,000 toward the purchase price, plus $20,000 for working capital and transactional costs. The remaining balance of the purchase price was met by $100,000 of seller financing.

CONTACT US

Our Allstate Team is always available to assist your agents with their financing needs.

Steven Kemper Director of Financial Services & Allstate Specialist steven@ppcloan.com	Dustin Mangone Allstate Relationship Manager dustin@ppcloan.com
Jared Moore Allstate Relationship Manager jared@ppcloan.com	John Carter Allstate Relationship Manager john@ppcloan.com

9303 New Trails Drive, Suite 375 ~ The Woodlands, TX 77381
Toll-free: 800.456.2779 | Phone: 281.419.0400 | Fax: 281.419.8309 | Email: info@ppcloan.com