I was recently asked about trends in the insurance agency marketplace; I thought for a minute since doing deals is so different from agency to agency, about some common scenarios we’ve been seeing. And it hit me:
There are always new buyers
Trends that I see are that there are still new people and new buyers that are still getting in the game, which with the interest rates going up, I would not have guessed that. I think that was a surprise. We actually found a new buyer, a private equity-based buyer who had just entered the market and was really looking for something that was exactly like our client.
It’s funny because I tell people this all the time, we don’t want to find the best answer. We want to find the right answer. And the difference is huge. The best answer is you get three proposals, and you accept the best one. And finding the right answer is you get three proposals, and none of them are what you want. So you keep going until you find the right answer.
Sometimes it takes additional time to find the right buyer. In one of our recent transactions, we ended up finding someone who hadn’t been in the market; they had just entered the marketplace. So I think patience in making sure that you find the right buyer, especially in this marketplace, is really important.
End of Year goals
Secondly, even though we just passed the first half of the year, you’re going to see an uptick in people out there doing transactions because, even though their interest rates are high, they’re required to grow. And the major way they grow is through acquisitions. So even though these acquisitions are more expensive now for them, we are going see an uptick. There are some buyers out there who haven’t sat it out and are still being very aggressive, but most of those buyers had their credit lines secure before the interest rates had gone up. The key really is to find the buyers that are smart enough to make sure that they have their lines secure because most of them are borrowing the money to do these transactions. A lot of the buyers that are aggressive out there were the buyers that secured their lines ahead of time, saw this coming, and really did a lot of work in securing their credit lines ahead of time.
The bottom line: Now is a perfect time to look into selling your insurance agency. Contact Sukay & Associates today and let us answer your questions.