When an Insurance Agency owner decides to sell their agency they usually have 3 concerns. How much will I be able to sell my insurance agency for? How will I keep the sale of my Insurance Agency confidential? What time frame can I expect to sell my Insurance Agency?
The true answer to the first question is; your agency will sell for what someone is willing to pay for it. As we’ve mentioned numerous times in this blog, there’s no magic formula for calculating the value of an insurance agency, brokerage or other type of business. Ultimately, businesses sell for what someone is willing to pay for them.
You can maximize the amount someone is willing to pay for your California Insurance Agency by taking a few simple steps.
- Be prepared. Having financials, commissions statements and other data will help your business “show” much better than the Insurance Agency that isn’t prepared.
- Price it competitively. Many people think they should overprice their business in hopes someone will offer them less which is what they really want out of it. This angle hardly works and will scare away qualified prospective buyers.
- Offer seller financing. 90% of businesses that actually sell – have some sort of seller financing. You should be willing to carry at least 20% of the sale price over a 2-3 year period in order to make your agency more attractive. You have a much better chance at fetching top dollar if you don’t require all cash. If you do require all cash – most buyers will want a discount.
- Have good representation. Having a 3rd party intermediary handle the sale of your insurance agency is a huge advantage. Buyers will discuss all of their concerns and state all of their objections to an intermediary. When dealing with the seller directly, they fear offending the seller, never bring up their concerns and never buy the business.
Selling an insurance agency is a life changing experience that should be handled with care. It’s very easy to waste months and possibly years courting unqualified buyers while your insurance agency’s production and service suffer. By hiring an internediary you can continue to focus on running your business while someone else weeds through buyers, presents your agency to qualified buyers and keeps the fact that you’re selling your insurance agency confidential.
If you have any questions about selling an insurance brokerage, please contact us today for a free no obligation consultation.