No, this is not an Abbott and Costello rendition of Who’s on First, but it is close.
One of my students was talking to another student about getting their first job out of college. I was trying to get the presentation for the class together when I overheard their conversation. I could not help being drawn into the fray. The first student was saying that it really does not matter WHAT YOU KNOW, it is all about WHO YOU KNOW. I thought this might be a good discussion for class because there really is a good argument on both sides. I decided to scrap that day’s lesson and asked the entire class what they thought.
As you might imagine, they all took sides and each side made an argument. The discussion went back and forth. They could not decide what came first, the Chicken or the Egg. At a certain point, they asked for my opinion. My answer was, Who you know gets you there and What you know keeps you there.
How This Applies to Insurance Agency Sales
The same question should be asked regarding the value that Sukay & Associates adds to the process of selling your insurance agency. Our prospective clients often feel that the value of an advisor is garnered from their ability to identify potential buyers, i.e. Who we know. Once they know who the Buyers are, they are then interested in current valuation multiples. What they should be asking is What we know about helping them sell their agency.
We tell prospective clients that identifying potential buyers is the easy part. The hard part is identifying the right buyer (Who we know) and then using our knowledge of insurance agency operations to help maximize the transaction value. (What we know) is critical in guiding the process from the original marketing of the agency, due diligence and the execution of the numerous legal agreements. It was making sure that we were able to run a fair and complete process that would give them the ability to share in any growth of the business in an Earnout.
In Practice
We recently had an interesting discussion with one of the more active buyers. They indicated that their goal was to make direct contact with agencies and to try to minimize the deals where advisors were involved. Once again, this triggered a few questions. Was this their goal because it enhanced their chances of success? The skeptic in me questioned whether they preferred that route because they ended up paying less for each agency. I’m not sure of the answer to those questions, but I’m pretty confident that it answered another question. If I owned an agency, would I use an advisor? If it is better for the Buyer to not have an advisor involved, it almost certainly means that it is beneficial for a seller to hire an advisor. Hopefully, they will consider Sukay & Associates.
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!
