We’ve mentioned in previous posts that 7 out of 10 businesses listed for sale never sell. This post will discuss these 3 points and give a brief explanation of each. Selling your Insurance Agency is no easy task and the first thing you should do is assemble a team of Professionals to assist. You won’t sell a home without a Real Estate Agent. You don’t do taxes without an Accountant or Tax Preparer. Why would you sell your business without professional representation?
The first reason businesses never sell are the price. Business Owners have worked for years to grow their business. Opening and closing the door everyday means they deserve top dollar for their business. Most sellers are also emotionally attached to their business because of the blood, sweat and tears invested. They often over price their businesses which makes it unappealing to buyers from an investment standpoint.
The second reason businesses never sell are the condition of their financial records. Difficulty verifying income is the number one complaint we hear from buyers. Some business owners don’t record cash then deposit some checks into one account while some checks go into another. Their taxes show they’ve made $20,000 last year yet they expect a buyer to come along and pay top dollar.
The third reason is the terms of the deal. Most business owners want to “cash Out” literally and want the entire sales price up front. The reality is, 90% of businesses that DO sell, have some sort of seller financing. Insurance is a bit different in that cash is a bit more realistic, but I’d say only 25-30% of insurance agencies sell without some form of seller financing. If you want top dollar, you have to be willing to carry anywhere from 10%-40% of the sales price. (Depending on the deal)
So there you have it, clean up your accounting, set a reasonable price and carry some of the financing and the chances of you successfully selling your business increase.
We’ve helped dozens of agency owners sell their businesses over the years and can help you sell yours too.