Are You Thinking of Selling Your Insurance Agency?

Before initiating a sale, an owner should ask the following questions:

  1. Do I know the real market value of my agency?
  2. How will I find potential buyers and negotiate the best price and terms for myself?
  3. How will I protect the confidentiality of the sale and screen out unscrupulous and unqualified buyers that might breach confidentiality or waste my time?
  4. Will I be able to manage the business and sale process simultaneously, dealing with the time commitment and stresses each entail?
  5. Do I know how to manage the process to reach an actual closing on the sale?

The reality is that most agency owners simply do not have the time or experience to carry out this important process on their own. Far too many owners attempt to sell their agency without the involvement of a skilled and experienced intermediary knowledgeable in the insurance brokerage business, and the end result is a high number of failed transactions and high number of transactions ending in litigation after the buyer has failed to perform as expected. We know because we have been hired by clients that met this fate.

Agency owners and many advisors often do not have experience and training in:

  • valuing insurance agencies and setting deal structures;
  • preparing an executive profile of the agency for prospective buyers to review;
  • executing a structured sale process to discretely solicit, screen and disclose multiple qualified buyers to flush out the best offer;
  • drawing up and negotiating the many details of purchase offers including terms, covenants, representations and protections for the seller;
  • preparing for, managing and expediting the due diligence phase of the sale;
  • aiding in the many approvals from carriers, lenders and other third parties necessary to consummate a deal; and
  • managing emotions and timelines to keep all of the parties engaged and committed so that the transaction actually occurs.

You are to be commended for succeeding in a competitive industry that has been bombarded with challenges on all fronts over the last few years. You’ve endured the recession and housing market decline, a shifting regulatory landscape, soft market cycle and a slew of carriers entering and leaving the market unpredictably. Now it’s time to reap your just reward. It is critically important to plan and execute your exit properly because you only get one chance to get the sale right!

When you honestly understand the effort and challenges that lie ahead, you can recognize the value in hiring an experienced, professional intermediary to sell your agency. So where do you turn for guidance? An owner has a few options on who to call for assistance.

  1. General business brokers – Most business brokers understand the process of a selling a business, but they likely know very little about the insurance industry, agency operations, how to value an agency, how to assess and prepare an agency for market, effective buyer prospecting and where to turn to help get the transaction financed by a third party.
  2. Insurance consultants – A consultant specializing in your industry may know the industry and business model very well, but probably does not know how to manage the sale process including soliciting buyers discretely, negotiating buy/sell agreements and helping to get the sale financed by a third party. Furthermore, industry consultants are usually not licensed to help you negotiate or sell your business as is required by most states so they are legally limited in their capacity to help with the sale process.
  3. National Merger & Acquisition firms – Specialized M&A firms will have extensive industry knowledge and experience in completing transactions. They are well versed in managing the sale process and have many contacts to facilitate deals, but they are typically interested in large agencies that generate many millions of dollars in commissions. Most operate out of major metropolitan areas such as New York and Chicago, so a seller may not have local representation or an advocate at their discretion. These firms will also require a sizeable retainer fee before working with an owner.
  4. Agency Brokerage Consultants – We have a team of highly experienced and licensed intermediaries that know the insurance brokerage industry, know the local markets, and know how to properly run a structured sale process. We can also help negotiate the complex details of the transaction and get you to the closing table with the greatest payout. In hiring us, you have an advocate at your disposal. We also do not charge a retainer fee when representing a client in the sale of their agency. With our success rate and processes, we are confident that our time investment in consulting with the client and preparing and running the sale process will result in a positive outcome for everyone.

If you are considering selling your agency, call us now to start developing your exit plan. In the meantime, please take the time to review our completed transactions and client testimonials, and listen in on our recent webinar presentation:


Agency Brokerage Consultants versus the competition