You've worked hard throughout your career to help families and businesses in your community protect their assets and loved ones from risk. With a busy business book, fantastic staff, and a well-established office, you've made a name for yourself and can be proud of your success. However, you may have come to a part of your life where you feel like now is the time for a change. You've built up an insurance agency that's provided for yourself and your family, but you're ready to sell. So, what happens next?
The following 4 steps will help you to prepare yourself for and to simplify the process of selling your insurance agency.
THE FIRST STEP - HAVE YOUR AGENCY VALUED
As an agency owner, you have been working hard to build your agency and make it profitable. Are you aware of your agency's value? It is important to determine your agency's value before you try to sell it. Several factors should be considered, including your agency's location, the markets you serve, and the variety of your books. Is your risk spread across many different accounts or is it concentrated in the hands of a few large clients?
THE SECOND STEP - HAVE A PLAN FOR THE MARKETING AND SALE OF YOUR AGENCY
Three years before you hope to close the deal, you should begin planning for the sale of your agency. It is important to hire the right team to guide you through the process, starting with a good business attorney. Performing the valuation is the first step. If there are issues, you have time to rectify them. After that, a prospective buyer's search, negotiations, and the final closing follow. There is a time commitment associated with each of these steps. Start the process long before you're ready to hang up your hat.
THE THIRD STEP - HAVE OPTIONS FOR SELLING YOUR AGENCY
You can sell your agency to a buyer inside your organization, such as a producer, or externally, such as a competitor. It is possible to borrow money in order to buy your agency outright when you sell your agency internally. In this case, the transaction is called a leveraged buyout. Alternatively, you might work out a deal where the buyer pays you incrementally until they have fully taken over the business. A transaction in which the owner finances the purchase is called an owner-financed transaction.
There are some external sales that are rolled up. The process of absorbing your agency into another agency's structure is called merger. A buyer can also purchase your agency outright and move right in without changing staff or location. Another type of book buy is when the buyer purchases a list of your customers only, not your staff.
THE FOURTH STEP - HAVE TERMS READY
Selling your agency means that you want to get as much cash as possible as a fixed price. It is in the buyer's interest to put down very little and pay a percentage of commissions over several years as the contract is renewed. The buyer and seller usually have opposite objectives, so they are usually at odds. It's important to know exactly what you hope to get out of the transaction going in so that you can end up happy with the final outcome of the sale.
When you want to sell your agency, having a great team by your side can make the process much easier. It will be bumpy. Expect it from the beginning. Even with the best planning, there is a chance that something unexpected will happen. Using a professional approach, these glitches should be dealt with. Please remember that this is purely business. Put all of the pieces in place and relax. You deserve to enjoy the fruits of your labor.