Perpetuation: Making the Right Decision

As a leader, you are constantly faced with decisions. There is a deep responsibility you have as a business owner. You have a responsibility to your customers, employees, vendors, and yourself.

Sooner or later, you’ll need to make the decision to do what is right and develop a plan to perpetuate your businesses.

What is at stake…

Customers build up a trust that you will be around and they depend on you day in and day out to deliver your best so that they can do what they do best.  Many of the agencies that we represent have had relationships with generations of their clients and have been protecting their businesses for 30 plus years.  These customers depend on their relationship with their brokers and the knowledge that they have shared with their brokers over the years. There is a comfort in knowing that their broker knows their business as well as they do.  Making the decision to sell your agency has an impact on them. They want to make sure that they are going to remain as important to the next owner as they were to you. When you are looking for a partner, or to sell your agency, you need to be sure that the buyers understand the type of business you have and that they place a value on those types of clients.

Employees are the reason that many of the buyers are attracted to a potential acquisition. Your decision to sell or not to sell affects your team directly.  Most employees have concerns about their job when an agency owner sells their agency; however, it can be a positive event for them as well. If you find the right buyer and the right fit it could offer more opportunities to your employees then you could by remaining independent.  If you remain independent and do not have a plan for succession they could be left without opportunities, and left with an uncertain future. Remember, they have helped you get to this point so keep them in mind when you are making your decision.

Vendors can also be a factor in your decision. It is important to note that many of the vendors that provide services to a broker are also clients. We like to do business with people that do business with us. It is important to understand how they are affected in this process and an effort should be made buy any buyer to understand the true relationship with a broker’s vendors.  True, many of them do business with the same vendors but there are some that are just going to be replaced in a sale. Brokers, more than most vendors, understand this because this happens to their clients. They know how they feel when their clients sell their businesses and they are replaced.

You are the one that has taken all the risk and have made all the sacrifices to make this all possible.  So what about YOU? You have proven that you are a trusted consultant to your customers, a loyal and proven leader to your employees, a fair and trusted customer to your vendors.  They have all trusted you year after year and they are trusting you now to make the right decision. Once you have considered everything above it is important to look at this decision based on how this affects you.

We have many agency owners that have told us that they can’t make the leap to sell to another party.  They tell us that being independent is the most important thing to them. Many believe that they are healthy and can work till they are in their late 70’s.  If they don’t have a plan for what happens after they are no longer there, then they need to read the above again. The question that many of them have not asked is “how does this decision affect the other people that got me here?”.  They are looking at their business through the narrowest focused lens.

Be that leader that they all know you can be and make the right decision to create a perpetuation plan now.  You might be surprised how much better you will feel when you have completed it.

The First Step

A Valuation. The Valuation of an Insurance Agency tells you more than just the price.

The valuation of an insurance agency isn’t just a figure; it can provide insight into the agency’s goals and help guide operating strategies in addition to its’ role in perpetuation planning. A lower than expected valuation may trigger the need to take certain financial actions. It could also highlight inherent risks in the agency such as an unwanted concentration.

The valuation of an insurance agency can prompt a sale that wasn’t planned, as well as stop a sale that’s already in progress. You may not realize how much value there is within your agency, or you may have overestimated it, but the only way to know for sure is to speak to a financial advisor and go through the valuation process.

Here at Sukay & Associates, we offer free valuations. As a firm, we believe in answering the question is our responsibility and the foundation of a great working relationship – even if that is in the future. Because of this, we are not like most firms. Click here or below to request a free Agency Valuation.


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