Selling Your Insurance Agency During an Economic Downturn

The current economic recession is affecting all business sectors, and private insurance mergers and acquisitions is no exception. While we are pleased to share that our inventory and roster of interested buyers is still thriving, the fact remains that closing a deal has become more challenging in 2023.

Under all economic conditions, unavailable funding is the single most common cause of a failed M&A deal. This risk is higher now than ever. Despite interest rates having dropped during the early stages of the recession, they are now climbing, making it imperative that successful M&A deals revolve around innovative funding arrangements that benefit sellers and buyers alike.

Whether you are planning to sell, purchase, or merge with an insurance agency in the next twelve months, it would behoove you to work with Springtree Group throughout the process. If you decide to work independently, there is a high likelihood of you wasting time chasing deals for which no funding will be made available, and your business plans will be delayed, or may even fall through entirely.

We continue to stress the importance of working with a highly knowledgeable, experienced, and specialized M&A firm like Springtree Group, particularly for agencies earning less than five million annually. Rest assured, large, conglomerate and national agencies would never pursue a deal without the support from a skilled team of brokers, but smaller agencies often do.

Unfortunately, this choice results in tens, or even hundreds of thousands of dollars sitting on the table. We have seen agency owners have to delay retirement, returning to work as employees to make up for the earnings they have lost by selling independently.

Despite this reality, it is no less important for interested buyers to align with a well-connected brokerage that has a robust selection of healthy, available agencies at any given time. Furthermore, at Springtree Group, our savvy team works with our buyers to secure this specialized funding at a manageable rate.

Working alone, you may find it impossible to find a lender who understands how and why to fund the acquisition of an independent insurance agency, let alone one who will offer you a reasonable rate of interest. Our network, though, is well-versed in the intricacies of the insurance sector and will be able to quote us a fair rate on the funds you need to close the deal.

Both our buyers and our sellers can be confident that they will not waste time diving down the rabbit hole after deals that, when properly understood, would have been clearly doomed from the start. Instead, buyers will be offered agencies in their desired market location, and sellers will be connected with buyers who already have funds in place to make a qualified offer despite the current economic challenges we are all experiencing.

If you are working toward buying or selling an independent agency in 2023 or 2024, please do not delay—contact Springtree Group now to ensure that your efforts aren’t derailed by the ever-changing financial landscape. Our team will work tirelessly for you from the first to the final stages of your deal.