Whenever I meet a client who wants an accurate picture of the financial health of their insurance agency, I think of how most of us naturally want a pat-on-the-back. I’ve heard the best way to ensure success is to take the safe route with an assignment. As long as you doing something well, no-one else needs to know how much better you could have been. The challenge of diagnosing the financial health of a business goes hand-in-hand with advising if the company is achieving its highest potential value. When I’m sitting across from someone saying to me they’re ready to get a snapshot of what they’ve built, and how much they’ve achieved, I try to remind them they’ve stepped into the ring now – and it will involve some stretching.
For any agency owner, this is a big step. Getting an assessment of any business’ financial health can feel like putting on your boxing gloves and doing thirty practice rounds. Any insurance business owner considering selling their company needs a proper assessment of its value. Up-to-the-minute advice is one of the best ways to show everyone where you are, especially when you’ve worked hard to establish the agency over many years.
Assessing your Financial Health in 2013
One compelling reason to get an accurate assessment of the current value of the business is to receive an estimate of the potential value of the agency. Companies should be sold based on the value that they can generate for another party. Our job would be easy if we just came in and accumulated the financial statements and called potential buyers. The greatest challenge, and opportunity, that we face is to perform an assessment of the agency and determine its potential value. We will suggest a series of actions to enhance value. I hate to see anyone work hard at owning and managing an insurance agency, forgetting to take the final and incredibly vital step of getting a third party assessment of the agency before they sell it. Owners who undertake a successful sales process do so by taking a hard look at their agency and by facing the difficult decisions.
Using an industry expert who brokers business transactions in the current financial marketplace is akin to securing a first class boxing coach. The public sees who wins the fight, and as the owner, you receive the cup and the title. Having expertise from a team ‘behind the punches’, means you hit your mark.
Getting an Accurate Value Picture
I’m absolutely certain, after many years of providing easy-to-understand descriptions of financial health for clients, that accepting advice from colleagues, friends, or even other insurance agencies will not yield an accurate value picture. The only way to be sure of the maximum payout at the best terms, is to let an expert work with you.In 2013, we saw buyers and sellers adopting several routes in order to establish the value of their firms. Past clients feed back to us that obtaining independent valuations is top of their lists these days. Or, to put it another way, they could never have been sure a financial value for their company was on-point, without a quality independent assessment to back their claims.
Sitting at the offer and acceptance table is something you do alone, but getting there in the first place, with financial information you can rely on, is the job of an expert assessment team.
