Springtree Group has never wavered in bringing our most important piece of advice to the attention of insurance agency sellers: Attempting to sell your insurance agency on your own rather than hiring an experienced advisor will almost certainly result in your earning far less than your business is actually worth.
Worse still, the hit small agencies take is far more significant than that experienced by larger organizations. However, our evidence is clear: agencies of all sizes must work in partnership with an advisor to secure offers that are fair and reasonable.
Bluntly put: Agency owners, you will lose out on tens or hundreds of thousands of dollars if you decide to sell without assistance from an advisor.
Smaller Agencies, Beware
The evidence we have compiled from data analyses across the country is clear: advisor-led transactions yield far higher multiples than those executed without assistance. Most recently, we consistently saw owners of agencies valued at $1million and below who hired advisors earn 55% more upon sale than owners of comparable agencies who failed to do the same.
The implications of this vast disparity are clear: the chasm between the financial yields of the two groups is widening at a rapid pace.
In 2019, this disparity was 28%. By 2020, there was a huge leap up to 41%. This trend has continued throughout 2023, which indicates that selling without an experienced advisor will result in an even greater loss in 2024.
Why is this Effect Experienced by Smaller Agencies?
When a larger agency is prepared for sale, their owners nearly invariably hire advisors. Smaller agency owners often won’t, perhaps mistakenly believing that their decision to work independently will save them money. The final result, however, is that agencies valued at $1 million and below are consistently losing out on hundreds of thousands of dollars when they sign on the dotted line.
What would hundreds of thousands of dollars represent to you? An earlier, or more comfortable, retirement? The ability to relocate to your dream destination? The opportunity to invest in a new business venture?
Here’s the most illuminating piece of information: an agency valued between $1 million and $4 million sold without an advisor’s assistance misses out on 24% on average. This is no small sum, certainly, but it is less disastrous than the massive percentages lost by smaller agencies.
These numbers speak for themselves. Should you hire Springtree Group, we will ensure that you earn the full profits you deserve for your business. By contracting with us, you will have instant access to our large pool of motivated, financially vetted buyers who are currently searching for healthy agencies in your region.
We are meticulous in our vetting of buyers, because failed financing agreements are the single most common reason a pending sale falls through. Your time is valuable, as is ours. We don’t want you to spend weeks or months invested in deals that never had a chance. In addition to being a huge waste of time and resources, such delays distract you from securing a qualified buyer, perhaps losing out on one or more buyers who will have moved on by the time you are informed of failed financing.
If you have already decided to sell your agency anytime between 2024 and 2027, it’s the perfect time to contact Springtree Group. We will guide you through preparing your business to be sold, how to gradually transition away from your current role, and most importantly, how to secure a sale that earns you top dollar for your years of hard work.