After devoting the latter half of your career to building a solid book of business, the time has finally come to sell your insurance agency. You envision the years of serving clients and building relationships with your team paying off with a tidy sum that you can invest into your next venture, or use to fund a comfortable retirement. You’ve thought long and hard about the decision—after all, this business is your pride and joy, and entrusting it to a new owner can be scary. But after much soul searching, and perhaps more than one conversation with a spouse or trusted friend, you’re ready to move on to the next chapter in your life. The question is, will anyone want to buy your agency?
All too often, insurance agency owners address the emotional factors of a sale without looking at the logistics. In short, they fail to see the forest for the trees. Understanding the following hurdles that keep qualified buyers at bay can help you avoid common deal killers and ensure that your business transfer goes through in a timely manner.
Weak Financials. A broker or prospective buyer will want to see the operating financials for your agency as a first order of business. If the numbers reveal slim profits (or worse, a break-even scenario), or if you’re struggling to pay the bills because of a lack of earnings, buyers will go elsewhere. To get the full asking price, bring your financial house in order by reducing debt, stashing away reserves, and showing aggressive profit. Healthy financials will provide ample evidence that your insurance agency is worth a buyer’s investment.
Sloppy Operations. If your agency lacks clear systems and processes, buyers will feel burdened rather than blessed. Although a new owner undoubtedly will implement a few procedures of their own, they shouldn’t have to create a work flow from scratch. Similarly, the office as a whole should appear neat and orderly, with documents filed in their proper place and accounting files kept up to date. First impressions matter, and neatness points to a well-run business with the potential to thrive.
Bad Reviews. Although your revenues may be solid, bad press is like a dark cloud over your agency. Savvy buyers likely will look up your business on social media to see what kind of feedback you receive from the community. Glowing reviews of exceptional customer service and a friendly staff will count in your favor, while posts about a lack of follow up or customer care can tarnish your image. If you don’t already have a strong social presence, create a Google Business page for starters, and ask several trusted, long-time clients to leave a short review. Offering a gift certificate to a local restaurant to show your thanks can build goodwill that can carry through even after you exit the agency.
People Leaving. Your staff is the lifeblood of your business, whether you have two people on your team or 20. Buyers want to know that the same employees who helped build a successful insurance agency still will be there after the business transfer. If your office manager plans to retire or your administrative staff intends to go elsewhere when you exit the business, the new buyer could be left scrambling to fill key roles. Even with strong systems in place, nobody wants to take over an agency only to have to train a new team. Ensuring that the right people still will be on board after your departure can build buyer confidence and help justify your asking price.
By putting in the time and effort to prepare your agency for sale, you can avoid common deal killers and demonstrate the full financial value of your business to gain the most profit. Springtree Group specializes in finding qualified buyers for agency owners looking to exit their business, and managing every facet of the agency transfer, from deal origination to negotiation, financing, due diligence and closing processes. By working with an experienced business intermediary that has a large network of industry connections, including legal and accounting experts and specialized lenders, you can benefit from comprehensive M&A services that are second to none.