Tips on Selling your Insurance Agency in California

November 26, 2012

Selling an Insurance Agency

Insurance Agencies are unlike any other business mainly due to the fact that there’s a measurable revenue stream that buyers can depend on for years to come. There’s still an abundance of buyers in the market, so selling your insurance agency today, makes sense if you’re considering selling in the next 5 years. With the unknown of Cap Gains taxes, the economy and interest rates at historic lows, sellers can demand more of a premium when selling today. Just about every insurance agency owner I speak with wants to buy an insurance agency. There’s cash on the sidelines and organic growth just isn’t what is used to be. When selling your book of business, you have to be careful of the buyer that wants to buy an agency but really can’t. Selling an agency can take from 60 days to 12 months and wasting time with buyers that don’t understand valuations or have capital will cost you more money than you can measure. Sellers are often at a disadvantage because most people sell one agency in their lifetime where buyers have probably been through the process in the past. We recommend hiring representation to act as your front line advocate so you don’t have to. The last thing you want is for your producers, CSR’s and other employees answering the phone to hear someone ask about the agency for sale! We use the real estate analogy. If you sold your house today  chances are you’d contact a real estate agent to help you list, advertise and negotiate the sale for you. The reality is, real estate is a much easier transaction than a business. In Real Estate you have comps, appraisals and other tools to gauge what the house is worth. Insurance Agencies are valued differently every time based on carriers, loss ratios, cash-flow, key employees, equipment, marketing presence and many other factors. So, when you’re ready to sell your California insurance agency, please contact us so we can help you maximize your selling price and give you peace of mind during the entire process.