If you are one of the many private insurance agency owners who plans to sell as part of your retirement plan, it is essential that you successfully time the sale of your insurance agency. Your long-term comfort and security will be greatly impacted by a multitude of factors; however, today we’re examining the importance of proper timing.

1. Biden’s Tax Plan

Under Biden’s proposed tax plans, business owners who earn over $1 million will owe close to double the current tax rate upon selling their business. This change will occur in 2022, so it may be advantageous for owners who are near retirement to consider exiting the market before this tax change takes place.

Take note: the insurance agency market will likely be unusually active from now at least until the new tax plan is implemented. If you plan to sell during this window of opportunity, we recommend listing your agency as soon as possible.

2. Low Interest Rates

If you plan to remain in the industry through 2022 or beyond, you will be pleased to know that indicators are that interest rates will remain historically low. Additionally, buyers are likely to have benefitted from the pandemic-related stimulus packages and will therefore be more likely to have cash on hand.

While this relatively higher access to cash will assist with successful deals, most buyers will still need access to financing to follow through on their purchase of your agency.

Springtree Group will leverage low interest rates and available cash to ultimately establish a high valuation for your agency. Then, our in-house financing organization will work with the buyer to create a robust financing structure with our lending network.

Our established relationships with close to 30 loan underwriters who specialize in the niche of financing insurance agency M&A transactions will result in buyers having the capability of making a larger offer.

The result: more funds going directly toward your retirement goals.

3. Your Business’s Track Record 

The aforementioned factors are external; the only way you can influence them is by acting in partnership with Springtree at just the right moment. This final consideration, in contrast, depends on how business has been for your agency over the last three or more years.

To benefit from the highest agency valuation, if possible, you will want to sell when you have had a trend towards revenue growth over the last couple years. If this goal is out of reach, aim for flat earnings for this same length of time.

While the market is active and healthy at present, an agency in decline will not be able to derive maximize benefits.

Springtree Group’s team of experts will work in partnership with you to ensure that the timing of the sale of your insurance agency is advantageous to you. We will also assist you at each stage of planning, selling, and transferring operations of your agency.

Our confidentiality agreement ensures that your privacy is fully protected as we match you with potential buyers and maximize available financing.

If you are weighing the benefits of placing your agency for sale now vs holding on until your business improves, contact us online or call us at (972) 395-8811.