This Is What to Consider Before You Sell Your Insurance Agency
Are you thinking of selling your insurance agency? Whether you're retiring, moving on to other insurance jobs, or simply getting out of the business of insurance, you have a lot to think about. You'll need to juggle many variables to sell your business the right way and for the right amount.
1. When and How Do I Plan to Sell This Business?
Business owners don't generally get to work one morning and suddenly decide to sell the business. A business sale should be something that you plan for over time. The more time you have to plan, the more prepared you can be to address concerns and value your business properly. According to the Insurance Journal, "When an owner spends some time planning the sale of a business, many common problems are minimized or avoided."
2. Are There Any Potential Concerns With Selling This Business?
When you have some time to think about the sale of your insurance agency, you'll be able to consider any obvious or slightly less obvious problems with a potential sale. For instance, if you know that your location is excellent but your landlord is planning to sell the property soon, that could pose challenges if there are no prime locations nearby and a buyer wants to run the business at its current location. If you have a family business but you know that your closest family members are not the ideal people to buy the business, you can work that out before a sale. Looking forward allows you to see these potential pitfalls and plan for them.
3. Who Will Buy My Business?
As you look into the sale of your business, you should determine who your market might be for the sale of your business. You'll need to decide if you prefer to sell your business internally, to an employee or family member, or if you'd prefer to sell it to another independent insurance agency, a regional agency, or even a national agency. There is a high interest in purchasing insurance businesses, so a large part of this decision depends on whom you feel would be a solid buyer and remain true to the intent of your business.
4. How Much is My Business Worth?
Valuation is an important part of a business sale. You don't just go forth and sell: you must first determine how much your business is worth. According to Agency Brokerage, "A firm involved in agency sale transactions will know what buyers are really paying in regards to transaction multiples and purchase terms." To value your business, you should interview professionals who can help you value your business. As you prepare to sell, be aware that prospective buyers will look closely at your profit after your income and expenses. Make your business decisions with an awareness of profit, especially if you are adding new products and services.
5. What am I Selling?
As you move toward a sale, you'll need to develop the terms of the sale. What are you actually selling? Whether you're selling stock or the book of business, you'll need to value them and determine what you'd like to sell and what buyers would like to buy.
At American Agents Alliance, we're here to support your independent insurance business at every step of your journey, from start-up businesses to the sale of an established company. Contact us today to learn more about the ways that we can support your growing insurance business.