We continue to see an overwhelming number of insurance agency buyers over sellers by a margin of 35 to 1. When selling an independent insurance agency, finding a buyer with similarities to your agency is key. Below are a few other tips for buyers and sellers.
The obvious reason is the fact that insurance agents are finding it more and more difficult to achieve organic growth and choose to buy premium as opposed to writing new business. Most buyers we speak with are having a tough time finding quality agencies to acquire mainly because the few sellers out there either have unreasonable expectations, the buyer doesn’t know how to execute a transaction and finding a fit is a challenge.
Buying an agency is a bold move and the most important aspect in successfully selling or acquiring books of business is preparation. Below is a short list of what you should do if trying to acquire an insurance agency:
- Have funds readily available: When sellers hear “I need to speak to the insurance bank” you’re moved to the bottom of their list. If you were selling your home and one person wrote an offer with a loan contingency and one didn’t, who would you choose?
- Respect the blood, sweat and tears that the seller has invested in the agency. You have to ask tough questions, but respect the value a seller places on the blood, sweat and tears it took to build their business.
- Find agencies similar to yours. Carriers, software, processes, etc.
- Understand how to value an agency. Multiple of revenues is not the correct way to value an insurance agency so educate yourself and learn how to speak with a prospective buyer or seller.
- Hire representation: Once you’ve identified an insurance agency seller, or buyer, an intermediary can take some of the emotion out of buying and keep the transaction moving along. We’ve seen many sellers get a sour taste in their mouth from a buyer that questions an employee, processes, reports, financials or other areas of due diligence.
- Last, but certainly not least, make an effort to find sellers. Carriers, Marketing Reps, Associations and other industry relationships can help you find an acquisition candidate as well as anyone.
Ganis Consulting has been assisting sellers of insurance agencies since 2005. We have industry expertise and understand deal structure, valuations and most importantly, how to get an acquisition across the finish line. We’re not typical business brokers that sell every business on main street, we sell insurance agencies and were insurance agency Producers and Principals since 1990. Call or contact us today for a free consultation on how to maximize the value of your agency. If you’re a buyer and have located an acquisition candidate, let us help you value the agency and help you successfully close.