Sooner or later, your insurance agency will be out of your hands. That is an inevitability many owners don’t want to think about, but it is inevitable nonetheless. Those owners that put off the sale of their agency often encounter the same problem when they finally come to sell. They never thought about the future, or how their actions affected the agency’s value and salability. If you ignore something for too long, it can be difficult to catch up. With that in mind, let’s go over the basics. When you have an insurance agency for sale, what are the key factors that affect the sale?
Agency History
Your agency’s history will be vital in securing a buyer. When you buy an insurance agency, you’re not just buying the building and the name; you’re buying the history too. The most successful sales are made between agencies with similar outlooks and values. When you decide to sell your agency, you should always be mindful of your agency’s history and goals, they will help you to find the right buyer.
Clients
Your clients will be a huge factor in the sale of your agency. They create the value in your business, so you need to understand how concentrated your business is on a single or small group of clients. That huge client that makes up 20% of your revenue may be a great asset now, but if they leave just before or during a sale it will have a very negative effect on the valuation.
Products
Your product offering will also have an affect on your value, and your salability. If you have a very narrow line of products it can affect different buyers in different ways. You will become more attractive to buyers who want to access your market, while some buyers may be reluctant to show interest in what they consider to be a niche agency. If your products are very specialized the right buyer will work really hard to acquire your agency, but the wrong buyer may want to make big changes.
Location
Location is a huge factor in the desirability of an insurance agency for sale. If you’re considering a sale, you need to consider the affect of your location. Are you in an area with a growing business population or high-volume industry center? Is your location declining in value? These factors will have an effect on your ability to make the right sale.
You
You will have a huge effect on a sale. You will be heavily involved in making the business look more attractive, both in the marketing process and in your long-term involvement in the agency. Young, passionate, engaged owners who see a sale as the next step in a wider career are most attractive to potential buyers. If you’re selling to get out of the industry, you need to consider the effect on the final value.
Your Goals
This brings us to your goals. In terms of the sale and your agency’s future, it’s vital that you have clear goals. You need to be certain on what you want for your agency, your people and yourself. If you’re unsure of what your agency needs, or don’t think a buyer will fulfill those needs; you may need to reconsider the decision to sell.
If you have never thought about selling your agency, these factors are a good starting point. By taking an unbiased view at each of these areas you will get a good idea of the salability of your agency. After that, your most basic requirement should always be that you make the sale that’s right for your agency.
