How to Plan a Graceful Exit from Your Insurance Agency

How much could you get for your insurance agency, if you had to liquidate right now? Add up the value of the computers, printers, chairs, desks, conference room furniture, and maybe the break room fridge, and see what you end up with.

Not much, right? If you haven’t planned an exit strategy for your business, that number may be all you get out of it when you sell.

Quantifying the Value
A good business exit strategy can take years to come together, because businesses are the least liquid investment you can make. Much of the value of your insurance agency resides in intangible elements, like your relationships with vendors and clients, your ability to manage employees, your attention to detail, and your vision for the future. Sure, your actual book of business translates into monthly revenue, but if the economy tanks or you have a critical health issue, you can’t just cash out of your agency and get full value. Without proper planning, customers can be snatched up by competitors, and reputation can vaporize into the ether.

If you are considering selling your insurance agency, you need a great exit strategy to ensure that you get the full value of your business. Here are four key action steps to help you prepare for the next chapter of your personal and professional life:

  1. Get an early start – Plan ahead by two or three years, so you have time to get your financials in order and groom your staff to manage the agency like a well-oiled machine (a valuable selling point in the eyes of prospective buyers). Methodically review and document different components of the business, including operations, employment practices, marketing, historical earnings, and financial projections. The better you can demonstrate that your agency is rock solid in each of these areas, the sooner you will find a qualified buyer, who is eager to take the reins.
  2. Set measurable goals – Your exit strategy should address organization, accountability, and ways to increase your asking price. What are your exit objectives? Do you want to transfer ownership to an employee or family member, or are you looking for an outside buyer? Do you know what your business is worth? An experienced business intermediary can assess the financials for your agency and recommend various strategies to maximize its value while minimizing risks and liabilities related to a future sale.
  3. Be flexible – As much as you want to codify your operations for prospective buyers, your business exit strategy should be flexible enough to be modified in the event of unforeseen circumstances. Your needs may change, the marketplace may change, or you may find a qualified buyer with unique criteria that require you to break from the status quo. Your exit plan should be able to adapt accordingly.
  4. Use a proven process – A seasoned business broker will have processes in place to help you get your financials in order, time the sale of your business, market your agency, maintain confidentiality, find a qualified buyer, and identify lenders to facilitate the sale. You should also speak with your CPA or financial planner to ensure that you are prepared for the tax implications of the sale and can maximize the earnings that stay in your pocket.

Taking the Next Step
Selling your insurance agency is complicated, and you only have one chance to get it right. Doesn’t it make sense to enlist expert help to get the highest price for your business, as well as ensure that what you spent your life building will still be around for years to come?

Springtree Group has decades of experience in the insurance industry and is uniquely qualified to help independent agencies with buyouts, mergers, book purchases, and agency sales. To learn more, call our offices at (972) 395-8811, or contact us online today.