Have you started thinking about how to reap the highest return on your significant investment of time and effort over many years in building your property and casualty insurance brokerage?
Sealing an insurance agency can be complicated and highly involved. Many insurance companies have dealt with selling their book of business or portions of their book of business, but selling their business as a whole is a completely different story. Whether you are an insurance agent tied to an insurance franchise company or you are an independent insurance agent or insurance broker, we can help you sell your insurance company effectively.
You should sell your insurance agency for its full worth, but how much is my business worth? Some buyers will want to acquire your entire insurance brokerage business and continue operating it at the same location. Others will prefer to buy only your book of business. Pricing these correctly is the first step you need to take when selling your business.
Regardless of whether a buyer is interested in purchasing just your book of business or the entire business, he or she will evaluate the following aspects of the business:
Buyers who wish to purchase the entire insurance brokerage operation or just the book of business may be equally interested in retaining staff with producer licenses or strong CSR experience. A buyer who intends to continue operating the business at its current location will want to get a sense of the volume of business generated by walk-in customers and know how many years you have left on your lease.
Make sure you get an insurance business valuation to price your agency appropriately.
Just as you match your clients with the most suitable carriers based on their claims history, risk profile, and the carriers’ products, so, too, do we introduce insurance agency owners to those buyers most likely to present the most attractive offers.
We spend considerable time screening each potential buyer for his or her ability to meet the seller’s requirements. For example, in representing a recent insurance agency owner, we assessed inquiries from over 40 buyers before introducing the seller to six of them. The result? The seller received offers from four of these buyers that were well above the prevailing price paid for insurance brokerages of similar size-and despite the fact that his commissions had declined in recent years. Moreover, a skilled business broker can provide valuable guidance in managing the flow of information during the in-depth due diligence process that will begin after you accept a buyer’s offer. In addition, since the due diligence process may unearth information that could potentially kill a deal, the business broker’s expertise can be instrumental in negotiating the most favorable resolution of such an issue.
Perhaps you aren’t planning to sell your insurance company for another year or two. If so, keep in mind that it can take at least six months or longer from the time you are introduced to a prospective buyer until the time a transaction is consummated. Moreover, buyers usually want the seller to remain involved with the insurance brokerage for at least 1-2 years after the sale.
Regardless of whether you intend to exit the business in the next 2-3 years, please contact our insurance specialist with any questions about the sales process or a preliminary recommendation for an asking price. We can probably also suggest steps you can take now to enhance the value of your agency when you are ready to sell. Please be assured that any information you provide about your business will be kept strictly confidential until such time that you might engage Synergy Business Brokers to represent you, and a potential buyer executes a non-disclosure agreement.
