Selling Your Agency? – Ten Points To Consider
1. Prepare a personal “WISH LIST.”
Know why you are selling and what you want. Don’t be hesitant about being selfish but be prepared to support your wishes.
2. Recognize that you will need experienced advice.
Whatever the size of your agency, you will have technical insurance, tax and legal issues. You will need help, but make sure that the advisors you rely on have actual insurance agency transaction experience.
3. Look Professional – Prepare a presentation document
Have all your key information (financials, personnel information, key accounts, etc.) in one place – preferably a professional-looking document.
4. Recognize deficiencies as well as strengths.
If you can’t fix your deficiencies then have a plausible explanation for them but DO NOT HIDE THEM.
5. Find the right buyer.
The right buyer will mean the highest price and the best terms. You will recognize him/her as needing something you have and it will likely be an agency that can effect a merger of offices on a mutually beneficial basis.
6. Protect your future options.
Even if you are “fed-up and just want out” your current expectations and attitude are likely to change. Don’t close the door completely.
7. Have a transition plan for your key accounts.
A good transaction should provide benefits to your clients. Unless substantial reasons for secrecy exist then before the news becomes public make them a partner in the transaction.
8. Have a transition plan for your key employees.
Disappointed/disgruntled employees can upset a transaction. Consider each employee on an individual basis.
9. Cash may not be the best way to assure security of payment
Most acquirers are hesitant to pay out a lot of cash based on expectations. As a result, expecting an abundance of cash will likely diminish your purchase price.
10. Contingent or Incentive-based Compensation
In many instances these can be devised to enhance the purchase price. If you are accepting future payments – even under an incentive plan, then you may be financing the purchase price and entitled to interest.
Finally, About Value:
Understand the difference between value, price and terms. A few, very few, agencies are worth two times their commissions. If you believe yours is one of them then be ready to support your view with reasonable arguments and facts – often a major reason for retaining a professional advisor.