I’ve Decided to Sell My Insurance Agency: Now What?

Something we hear regularly is, “I’ve decided to sell my insurance agency: now what?”

Springtree Group assists sellers in navigating each step of the M&A process, and we will connect you to qualified buyers who have received our in-house financial coordination.

Still, it is essential that you familiarize yourself with what is involved in selling your agency. Knowing what to expect will allow you to make maximally informed decisions well in advance.

Enter a Non-Disclosure Agreement with Potential Buyers

Your agency’s information must be protected and kept confidential all throughout the acquisition process. Both Buyers and Sellers are expected to execute an NDA with Springtree Group.

Enter Negotiations

The negotiation process can be lengthy, or it may be relatively brief. Either way, Springtree Group will lead the negotiations between you and the buyer in an effort to provide you with the best outcome. We are here to ensure that your interests are properly represented. You may have to make some concessions since compromise is the cornerstone of negotiations, but we will not make you feel as though you should make a deal that will not make you happy.

You can expect to discuss:

  • Purchase price
  • Transition process
  • Up-front payment percentage
  • Form of payment
  • Length of seller note if any
  • Noteworthy integration instructions
  • How key employees are to be compensated
  • Any extended consulting terms for you as the owner
  • Non-compete terms

Once a deal has been negotiated, the buyer will provide you with a Non-Binding Letter of Intent, or LOI. The LOI will be thorough, detailing the key components of their offer.

You will then want to review the LOI carefully. Once you approve the terms of the LOI, we will then be in a position to move forward with due diligence and get prepared for the closing.

Due Diligence

You are now in a position to speak with your key accounting and operational staff or vendors (aka CPA) about this potential acquisition. You will be asking your finance, operations, IT, and legal departments for data to confirm key financial performance, operations, and legal aspects of your agency. This means that you will need your staff to throw their support behind the sale process, so it is up to you to frame things in a way that leaves them feeling positive about the upcoming change.

You may wish to bring in outside help from consultants or advisors—the scale of your agency, personal experience, and your staff’s reaction to the news of the acquisition will all affect how necessary this step is. Springtree Group will communicate directly with these outside vendors/consultants if you desire.

Springtree Group will partner with both your attorney and the buyer’s attorney to finalize the purchase agreement as well as other closing documents such as Bill of Sale, and non-compete documents, in addition to the Purchase agreement.

Once we have executed the purchase agreement and the buyer has made their payment, your agency will have been sold.

A final note: agency owners are often surprised by the length of time required to sell an insurance agency. It is not a rapid process, nor should it be. If you have decided that selling your agency is something you’d like to do within the next two years, contact Springtree Group as soon as you are able.

We will put you on track to have your agency properly prepared for a successful sale and begin searching for qualified buyers.