Owning an insurance agency can be extremely fulfilling. Not only does owning the agency allow you to make a good living, but you will find you have the enjoyment of building a business that affords you a variety of lifestyle options. You can spend time with your family and take time for yourself enjoying lots of activities and hobbies while your agency “works” for you. You will notice that owning your own insurance agency usually requires a lot of effort, especially during those first few years. However, once the business is established and profitable, it becomes much easier for you to pass down the core operational responsibilities to other employees. But what happens when you decide to retire and/or get out of the business altogether?
What happens after you sell your insurance agency?
Selling your agency usually ends with you receiving a nice sum of cash. While this sum of money may seem appealing at first, it’s important to remember: you are in return giving up access to future cash flows from the agency. You will also be giving up your clients. In most cases, agency owners continue to work for the new agency for a number of years, but you will need to eventually step out of the business entirely, cutting all ties with its operational processes. That can be hard to do for many owners.
Here is what most people think happens to them after they sell their agency. They think that once you sell the agency you will find yourself with some much deserved (and probably needed) free time. What will you be doing with it? They think that many owners take up golf or fishing. If they don’t, they will just hang out with friends and families and allow them to bear the brunt of a newfound boredom! Travel is another option. You can go on vacations to destinations you have always wanted to visit but never had the time to. The world is truly wide open to you after you sell your insurance agency. The reality is that this is rarely if ever, what happens. The agency owners most often stay involved in the agency for many years after the Closing. They enjoy their newfound professional acquaintances and get a renewed interest in the business.
Most of all, the personal traits that allow them to be successful in business allow them to be successful in their retirement. They do enjoy the freedom, but they often find a new and interesting challenge. They wonder why they didn’t make the decision earlier. They find out that their concerns did not turn out to be a reality.
It is important to consider what happens after you sell because you will need to prepare financially for the goals you set. You turned a valuable asset that was illiquid into several million of cash. We suggest that you should meet with your financial advisor to make sure your desired lifestyle is covered.
How do you know when you’re ready?
How do you know when you’re ready to step down? There are the financial questions you should ask yourself. One of those questions should be can I afford a loss in value of my agency? This happens all of the time. You may lose a major account or the market might soften. The market has never been stronger for agency multiples. Don’t believe for a second that multiples can only go up. What happens if just one private equity transactions goes bad?
Your business is part of you, it’s your legacy….it’s personal. Chances are the decision will be quite an emotional one. But ask yourself:
- Do I enjoy what I do on a daily basis?
- Am I having fun?
- Am I ready for a new challenge?
Answering these questions and asking advice from your trusted advisors will point you in the right direction. Knowing what happens after you sell your insurance agency is crucial to the overall success of your future, both from a financial and emotional standpoint.
The Value of Your Agency
As a firm, we believe an accurate valuation is part of our responsibility and the foundation of a great working relationship – even if that is further in the future. Because of this we, unlike most firms, offer free insurance agency valuations for those who qualify. Click below to apply!
