Are You Thinking of Selling Your Insurance Agency?

Before selling your insurance agency, you should ask yourself 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 insurance 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.

Why should you hire an experienced M&A advisor to assist you with the sale of your insurance business?

1. They know the market value and how specific buyer types will evaluate the business.

2. They will prepare the agency for sale and create a professional, comprehensive report to share with qualified buyers that greatly expedites the sale process.

3. They have contacts with a variety of buyers in the marketplace and will handle contacting, screening and disclosing them to flush out the very best offer available.

4. They can assist you in reviewing and negotiating the many details of a formal purchase offer, including terms, covenants, representations and protections.

5. They will prepare for and manage the buyer’s due diligence process, increasing the speed at which it gets completed and helping to navigate obstacles.

6. They will know the various industry lenders’ underwriting guidelines, which will offer the best terms for a specific transaction and how to navigate their loan process.

7. They have experience managing emotions and timelines to keep the parties engaged and committed so the transaction actually occurs.

How to determine which M&A Firm to Use?

1. They have completed many agency/broker sale transactions. Check their website as all professional firms show a list of former transactions.

2. They are trained M&A professionals. Look for certifications such as the CBI (Certified Business Intermediary), M&AMI (Merger & Acquisition Master Intermediary), CM&AA (Certified Merger & Acquisition Advisor) and CVA (Certified Valuation Analyst).

3. They have a good reputation in the industry. Ask industry associates, check their website for letters of recommendation and ask to speak with former clients before hiring their services.

4. They demonstrate expertise and professionalism. They should ask you a lot of questions about your business, request a variety of financial and operational reports and provide a professional valuation report before taking the agency to market.

A professional firm will communicate their process to you. They will want to understand the business, assess its value and prepare for the sale process by collecting relevant information before taking you on as a client. They will also work with you at every step of the process. An unprofessional firm will rush to sign you up, disclose buyers and let them run you through the ringer hoping a sale will transpire so they can get paid. For most agency owners, their business is their greatest asset. You only get one shot to sell it for the highest value so do it the right way and hire an experienced professional.