Selling an Insurance Agency: Choosing an Advisor

You need to find an advisor that will be committed to never doing anything that is not in YOUR best interest! 

When selling your insurance agency, it is important to partner with an advisor who has extensive experience in the insurance industry. The insurance agency space is very different than selling a manufacturing company.  It is important that you find someone to represent you that understands what is currently going on with the market. They also need to know who the buyers are in your specific market.  You also want your advisor to have the guts to tell you to walk away from a transaction if it does not achieve your goals.

What Is Your Goal?

The first question a competent advisor will ask when you meet is what is your goal? Are you planning to set yourself up for retirement?  Are you looking to expand and run a larger agency?   If the advisor doesn’t ask these questions in the first meeting, it’s probably your best bet to keep looking.

Planning the Exit Strategy

When choosing an advisor, make sure to search for one who is willing to stick with you throughout the entire process. An advisor that tells you that selling your agency is easy and will only take a few months’is not telling you the truth. A successful sale of an agency usually takes 6 months to a year to do it right. During much of this time, your advisor will assist in helping you identify your goals, creating selling strategies, performing an insurance agency valuation, and connecting you with buyers.   The sooner you start the easier it is for an advisor, to put you in a position to get the agency’s financials in the right place, which is crucial to enhancing the value of your business in the eyes of buyers.

Knowledge of Impacting Variables

A knowledgeable advisor will also inform you that there are a variety of general variables that influence how simple or difficult the sales process will be. When you choose an advisor, make sure to mention the following factors and how the advisor plans to address each of them. All of these factors impact the buyers’ perceptions of your agency.

  • Location of agency
  • Sales of New Business
  • Client retention rates
  • Agency History/Agency reputation/Do you plan to remain with the agency after a sale
  • Revenue history
  • Growth rate
  • Dependency on large accounts
  • Quality of insurance markets
  • Let them know if you have a specialty market or niche
  • Technology platform

Choosing the right advisor will influence all aspects of selling your agency. Always give much consideration to the advisor you partner with, and always choose one who has superior knowledge of how to enhance both the value of the agency and the post-transaction fit.


The First Step

A Valuation. The Valuation of an Insurance Agency tells you more than just the price.

The valuation of an insurance agency isn’t just a figure; it can provide insight into the agency’s goals and help guide operating strategies in addition to its’ role in perpetuation planning. A lower than expected valuation may trigger the need to take certain financial actions. It could also highlight inherent risks in the agency such as an unwanted concentration.

The valuation of an insurance agency can prompt a sale that wasn’t planned, as well as stop a sale that’s already in progress. You may not realize how much value there is within your agency, or you may have overestimated it, but the only way to know for sure is to speak to a financial advisor and go through the valuation process.

Here at Sukay & Associates, we offer free valuations. As a firm, we believe in answering the question is our responsibility and the foundation of a great working relationship – even if that is in the future. Because of this, we are not like most firms. Click here or below to request a free Agency Valuation.

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