Once you have decided to move forward with selling your insurance agency, it can seem like the most difficult part of the process is finding a qualified buyer. However, you may find that negotiations are often where the challenge truly begins. The good news is that by following a proven set of business principles, you can maximize your chances of a smooth, mutually satisfactory sale.
Avoid coming off as desperate, even if you have an urgent need to sell.
Desperation will signal to potential buyers that you may be willing to accept a less-than-desirable offer. By contrast, adopting a confident and calm demeanor will inspire respect and generate better offers.
Set your asking price higher than your minimum requirements (but not too high)* – giving you room to negotiate.
In any business transaction, it’s likely that buyers will bid below your asking price. If you set your asking price as low as possible to generate a quick sale, you’ll likely take a financial hit. It’s highly unlikely that a bidding war will drive up the price enough to pad your bottom line.
*IMPORTANT NOTE: Don’t take it too far. If the pricing is above the market, potential buyers may be frightened off before negotiations even begin.
If a potential sale turns sour, be the party who walks away.
It’s disheartening to have a sale fall through, but it’s better to be the party who maintains dignity and walks away from the sale. While it’s difficult to let go of a buyer when you feel ready to part with your insurance agency, wasting time chasing a bad transaction is never a smart move.
Revere honesty and integrity.
Being less than forthcoming regarding any aspect of the potential sale of your insurance agency can undermine your reputation. Stay true to your core values throughout the negotiation process.
Remain cordial and professional with the other party, regardless of their behavior.
One would hope for polite and professional interactions during a business transfer transaction. However, even if that’s not what you receive from the buyer, it’s important that you always choose to take the high road.
Nibbling: The Death of the Deal
In our experience with independent insurance agency sales, we’ve found that sellers can torpedo a robust offer by over-negotiating. While it’s important to remain firm in order to secure your target financial figure, it’s also crucial to be diplomatic and flexible in your timing and approach.
When an owner/seller accepts an offer on their insurance agency only to begin asking for more, this is referred to as “nibbling,” and it must be employed judiciously. Experts agree that you should ask for only one or two further (small) concessions after a deal has been reached.
Further delays and requests can frustrate a buyer and may cause them to change their mind about purchasing your agency. To continue coming back with more requests can suggest to the buyer that you are unreliable and can potentially ruin your shot at a great transaction.
As your insurance industry business intermediary, our goal is that the sale of your agency progresses smoothly and leaves you satisfied with the outcome. Springtree Group has made this a reality for many insurance agencies just like yours. Visit our website or reach out to us via email (firstname.lastname@example.org) to learn how we can help you negotiate perfectly.