As part of our day-to-day, we spend a lot of time speaking with those responsible for purchasing independent insurance agencies as we look for the right fit for our clients. Many of the buyers that I speak to would rather contact agency leadership directly and avoid the intermediary or advisor.  Lately, I have had several conversations with some of the major buyers in the marketplace about the competitiveness in the industry. I ask them to give me feedback because it is important to us to understand how the marketplace views our business. 

I am surprised at their candor but I appreciate it.  From their standpoint, there is a growing sentiment that when they are forced to deal with advisors it creates a level of difficulty and also forces them to spend more time, effort, and money to complete a transaction when there is an advisor involved. I understand this position because my entrance into the world of insurance M&A was as someone responsible for buying insurance agencies.  We usually welcomed the involvement of advisors but I will admit that there were some that just caused us difficulty.

A fine line

How do advisors walk the fine line of adding value to all parties in the transactions and doing the best job possible for our clients?  I offer the following thought for consideration:

Great advisors

A great advisor should allow a seller and a buyer to spend LESS time taking a transaction from beginning to end. They should add value to the process or get out of the way. Great advisors know when to get out of the way.  We do sometimes create additional steps by invocating competition to be sure that the clients are getting a fair price. We believe that there are benefits to this process for both buyer and seller. Competition often reveals the fit and gives the buyers and sellers the ability to see how each operates in a very stressful and competitive situation. It also saves time and money later in the process. I believe that both sides benefit from this process.  

Great advisors understand the marketplace and work with their clients to fix issues in their agency so that once they do find the right fit that they can hit the ground running and contribute to a potential buyer immediately. This helps both buyer and seller because buyers do not want to focus on repairing issues in an agency. They would rather help their partners grow the business. This benefits the sellers because they will get more value for their hard work and be able to contribute to a new organization immediately. It allows sellers to reap additional benefits that could come as part of an earn-out.

Great advisors will have a solution-first attitude. They will use their experience in past transactions to help both their clients and the buyers to come up with solutions to issues that will always come up during the process. They are able to see both perspectives and try to offer solutions that help move beyond the issue to a solution. No one has all the right answers but good advisors are able to avoid issues before they become problems because they know the client’s needs and can see things from the buyers’ perspective.  

Our goal as advisors is to make sure that we are achieving all our client’s goals. Good advisors stop at the financial goals. Great advisors know that you need to make sure that all of our client’s goals are achieved.  

Running an insurance agency vs selling an insurance agency 

Running an agency and selling an agency are very different things.  We had a recent interview with a client, Mel Warren, he perfectly summed up the importance of having an advisor throughout the acquisitions/perpetuation process, “Between the partners, we had 90 years of insurance experience. So, it is easy to be skeptical about needing help in going through the process. What you know about the insurance business and what you know about the M&A process are two different things.”

To be or not to be (represented)

So If you are not sure if you want “To Be or Not to Be” reach out to us. No matter what direction you decide to take, understanding the value of your agency is the natural place to start. 

We, at Sukay & Associates, offer free valuations to insurance agencies that qualify. Contact me to discuss this option. We are here to help.