BMO and Farm Mutual team up to provide financing to assist in broker perpetuation

BMO Bank of Montreal and Farm Mutual Reinsurance Plan Inc. (FMRP) have launched a joint financing program designed to assist with the perpetuation of independent insurance brokerages.
The Insurance Brokers Association of Ontario (IBAO), which initiated the partnership, issued a press release applauding the move.
“There will be increased demand for buyout financing as more and more of our brokers approach retirement age,” said IBAO CEO Randy Carroll. “It only makes sense that two longstanding supporters of independent insurance brokerages, FMRP and BMO Bank of Montreal, are involved in offering brokers a solution to perpetuation financing, and we are grateful for that.”
A Cookson Walker Consulting survey estimates that by 2012, 300 privately owned brokerages (amounting to Cdn$900 million in value at today’s prices) could be changing ownership in Ontario. CCIR statistics in 2004 recorded about 1,200 brokerages in Ontario.
Under the financing program, BMO Bank of Montreal would provide buyout financing to qualifying brokers; FMRP would assist with creative financing structures. The product is intended to appeal to individuals seeking ownership, as well as brokerages looking to expand through acquisitions.
In 2007, IBAO encouraged the two companies to come together and find a solution to the buyout financing demand that would benefit all parties.