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When it comes to helping a client sell their insurance agency, it’s crucial to reflect on our recent transactions to derive valuable insights and learning opportunities. The past quarter has been eventful, with significant transactions showing us the dynamic nature of the markets. Through these dealings, we’ve been able to unearth trends, understand market movements, and better predict future possibilities. Let’s delve into some of the key takeaways from our recent transactions.

Things We Learned

Let’s start with just a little bit of background on these transactions. I’ve been working on one of them for a little over two and a half to three years. That one was quite interesting because it was definitely a different type of transaction. It wasn’t something that I’d experienced before, believe it or not; even with all the experience I’ve had doing transactions in this space, this was a new one for me.

I learned a lot in the transaction. But one of the most important things I think I learned is that the reason these deals fail is basically a lack of trust. It is a lack of trust on all sides. It could be the buyer, could be the client, could be the advisor, but things happen in transactions. It’s true that anything that’s really important doesn’t come without setbacks. In life, in business, and certainly in our transactions, things happen. There are things that change in these transactions. Some of them are not predictable, and sometimes you can’t overcome those changes.

Fortunately, this time we were able to do that. We were able to overcome the changes and have a successful transaction. Most of our clients believe that the most important thing we do is find a buyer. And that’s it’s not true. That’s not where our value comes into play. Where our value comes into play is getting the transaction from the letter of intent to closing.

It All Comes Down to Trust

When you get a letter of intent, people think most of the negotiations are over. The problem is all through a transaction from the beginning to the end, from the day you start till the day you sign; there are negotiations going on. There are changes that need to be dealt with. There are issues that come up that need to be resolved. And in both of our recent transactions, we had issues all the way up till the day of closing. Some of them are things that probably should have been identified prior, either by the buyer, the seller, or the advisor, and some of these things were not expected at all. They just happen to pop up (it may be an illegal document that the seller was not sure of or doesn’t understand how it affects their deal, etc). They have outstanding loans sometimes that affect these transactions that they don’t realize. And these things pop up when legal, due diligence, and due diligence are conducted, so how you deal with those issues is really where the trust factor comes in. 

Once you get a letter of intent, part of that letter of intent is only to allow that particular buyer to go through a due diligence process. So it takes the seller off the market for at least 90 to 120 days. Most of these sellers go through this process for 90 days through due diligence, whether it be financial or legal due diligence, and sometimes, when these things pop up, there are major issues that can actually change the course of a transaction.

So it really is that trust factor. It is really important to know that you found the right partner for your client. Those things really get revealed in those situations. Both of the transactions that we’ve got that we closed recently had serious issues that arose, and the only reason that we were able to get over those issues is that everybody trusted everyone in the process. We believed that people were acting in a trustworthy manner. All through the due diligence process, things were brought to our attention. Issues were resolved in a very fair way.

When the major issues pop up, and they get resolved in a fair way, you know you’ve found the right partners.

Our recent experiences underscore the paramount importance of trust within the whole process. When major issues arise, it’s the fair resolution of these complications that signifies a successful partnership. It’s not just about finding a buyer or a seller; it’s about establishing relationships grounded in trust and transparency. These relationships can then navigate through unexpected turns and successfully bring a transaction from a letter of intent to a fruitful closure. This is where we provide real value.