We’ve all heard it at insurance conferences, dinners and carrier events. Agents are looking to acquire a book or buy an agency because it’s one of the best investments on the planet. Problem is, most of these buyers love the sound of acquiring an agency, but most never do. When there’s an opportunity presented to them, they tell you why the prospective agency is the biggest piece of garbage they’ve ever seen and offer 1/2 of what it’s worth. I’ve always wondered; if an agency is so overpriced, poorly run and headed for disaster why does the “buyer” still want to negotiate? We all love a good negotiation, but this is the wrong way to go about it.
I’ve had agency “buyers” say they’re not interested in an agency if other buyers are interested. They want to be the only one talking to the seller, because they don’t want to get into a “bidding war”. The translation; I’m most likely not going to buy anything but feel like a big shot talking about it. Ok, maybe a bit harsh, but who the heck wants to do business with someone like that?
My wife and I sold our first agency in 2005. Our Agency was 1.7 million in revenue and it was one of the most stressful times of my life. Luckily, our buyer was a champ. He built rapport with us, made a fair offer and consummated a transaction within 90 days. In fact, we still do business with them today and have become good friends. If “buyers” took a page out of that book, they’d win more deals, but unfortunately; they turn buying an agency into blood sport and small agency owners are treated like adversaries. Put yourself in the sellers shoes; would you want to sell to an adversary?
Someone in business for 30+ years decides to sell, only to have someone tell them their baby is ugly. You can tell me the baby needs a haircut, a new stroller or new clothes, but do you have to call the baby ugly to get a lower price? Use some tact!
Devaluing the quality of an agency to get a better deal will do nothing but arouse resentment and friction. Am I saying you should give in to every demand and over pay? Of course not! But, a little empathy along the way, with some give and take goes a long way. I’ve learned that most sellers want the right buyer, not always the highest paying one.
The people out there buying agencies and growing via acquisition have great people skills. The last 10 agencies we’ve sold have gone to 4 buyers. These buyers know how to talk to a seller, understand there’s a give and take when negotiating and are determined to close a win-win transaction. Unfortunately, this is the exception and not the rule.
If you’re looking to buy an agency and have identified a target, contact us for a free consultation and learn how we can help you win the deal.
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