Common Issues When Selling Your Insurance Agency
Making the decision to sell your insurance agency can be stressful. Luckily, the market pricing for independent insurance agencies is at an all-time high in 2019. There is a lot to know before selling your agency, including how to value your book of business.
When Selling Your Insurance Agency Hits A Road Block
The steps to complete the sell of your insurance agency have begun with phone calls and meetings with your potential agency buyer. Things look great, until you hit a road block that puts a hold on your deal. You can avoid or mitigate the situation if you plan ahead. See the top reasons for delay and how to solve the issues.
Be Prepared for the Sale of Your Agency
With any substantial business transactions, organization is key. A buyer will need common due diligence items before finalizing the sale. Being prepared with items such as financial statements and carrier reports. Many sellers lack this basic organization and depend on others to provide the information. Because of the dependence on another professional, such as an accountant or carrier representative to generate this information, it will cause an immediate delay for the data needed. Any sort of delay in providing the due diligence can be disastrous. Don’t let “time kills deals” happen to you. Start by getting organized today, even if you are only just in the consideration phase.
Financing the Sell of Your Insurance Agency
Many buyers have the best intentions when it comes to buying an insurance agency. They are agreeable on your price, payment, employment terms and the such. It’s getting exciting to see all of your hard work is paying off. Then time starts to pass without hearing from the buyer, days turn into weeks. You start to wonder, “what is the delay?” More often than not the buyer is having issues coming up with the financing to close your deal. Many times, the buyer thought they would easily qualify for the financing or even had a “financial partner” in mind. Depending on the answers to the questions below, you may want to consider killing the deal.
- Have you bought an agency before?
- Will you be using cash on hand to fund the transaction or will you need a business loan?
- Will you be using a SBA lender or traditional lender?
- Can you give a reference of a past agency owner who has sold to you in the past?
The Complexity of Multiple Owners
Some agency sellers will have multiple owners with competing interests. When it comes time to sell, it is imperative that all of the owners of your agency are ready to sell. It can be frustrating if one or more of the owners does not want to sell. Be sure to talk with your business partners about the possibility of selling long before moving forward. Having a majority stake in your business will help get more buyers interested in purchasing your business. Bottom line all sellers need to be in agreement before the selling process begins.
Is Your Lawyer Available?
Business lawyers have the skills to help any seller make sure the contracts are in the best interests of the seller. Some lawyers work at their own pace and don’t understand the urgency that selling your insurance agency can pose. Make sure your lawyer has the time and capacity to work with you on the sale of your agency. An overly extended length of time could cause issues between the buyer and seller.
Work With an Experienced Professional
GDI Insurance Agency, Inc. has been in business for nearly 30 years and have bought, sold and merged with various entities for over 20 years. We pride ourselves on providing accurate and honest opinions to our friends and partners and invite anyone looking to sell in the states of California, Arizona, Nevada, and Oregon to reach out to us for a consultation.