Top 10 Things to Know Before Selling Your Insurance Agency

You’ve worked hard to build your company, but you can’t run it forever. Before you sell your agency, here are 10 things you should know.

1. YOU’LL NEED A SUCCESSION PLAN, EVENTUALLY

   Even if you don’t have any interest in selling right now, it’s smart to start thinking about your plans. Sometimes people sell their agency when they’re ready for retirement, but other times, plans are forced to change, whether it’s due to a health issue, family responsibilities, or shifting goals. Having an exit plan ready will make things easier when the time comes.

2. YOU SHOULD KNOW THE VALUE OF YOUR COMPANY

   Your agency holds tremendous value to you – but what kind of value will it have to potential buyers? To make sure you get a good deal and that your expectations are realistic, it’s important to have an accurate valuation of your agency. Knowing your agency’s worth can also help you identify the steps needed to boost the valuation. Agencies can be sold based on their top line, EBITDA, or sometimes a combo of the two. Your agency network, your accounting firm, or your legal partner can all be good resources in determining an accurate value.

3. YOU SHOULD CONSIDER WHAT YOU WANT OUT OF THE SALE

   Are you looking to make as much money as possible? Or do you want to protect your company’s legacy? Do you care if the name stays? What happens to your customers – will they be consolidated under a service center? What about your employees – Is it important they maintain a role in the company after you’re gone or you’ve sold? There’s a lot to consider, and every owner will have a different take on some of these issues. It’s your agency, so it’s important to consider what your priorities are.

4. YOU NEED TO NAVIGATE REGULATORY REQUIREMENTS

   Selling any business can be complicated, but this is especially true in the highly regulated insurance industry. Insurance agencies are subject to various laws and regulations. These can vary from state to state, so before you make any plans to sell your agency, you need to make sure you’re complying with all relevant rules.

5. YOUR CLIENTS MAY WORRY

   If your clients signed on with your agency because they trusted you, they may be concerned about how the sale will impact them. This is understandable, but a sale could actually be a neutral or even positive transition for them if it’s positioned correctly.

6. YOUR EMPLOYEES MAY WORRY EVEN MORE

   It’s normal for employees to worry about job security and operational changes, but once again, this does not need to be a negative event for them. In fact, they may be able to access new resources that will help them thrive.

7. YOU MAY NEED ASSISTANCE FINDING THE RIGHT BUYER

   If you don’t already have a buyer in mind, finding one can be daunting. There are many potential buyers, but you want to find one that’s a good match for your agency and aligns with your company’s culture. After all, you’ve worked hard to build this company, and you don’t want to leave it in just anyone’s hands. You can search for an appropriate buyer yourself or you can leverage connections through an M&A brokerage/network that specializes in the sale of small insurance agencies.

8. EVEN IF YOU HAVE A BUYER LINED UP, YOU MAY NEED GUIDANCE TO CLOSE THE DEAL

   The buyer may need financing and other types of support, and you may need help navigating the process. It’s always a good idea to involve an M&A-specialized legal partner and an accountant. A CPA can help you understand the tax consequences of the transaction. If you don’t have partners to help in these areas, ask your agency network for a referral.

9. IT CAN BE THE RIGHT CHOICE FOR YOUR AGENCY

   Selling your agency can be the right move for you. It can also be the right move for your agency. You’ve made your agency into something to be proud of, and the right deal can open up new resources to take things to the next level.

10. YOU HAVE OPTIONS

    Whether you are considering a sale due to timing, financial goals, retirement, or otherwise … there are many choices available. At Heffernan Network, we offer two distinct solutions.
    • The first option is a traditional agency acquisition. This is a good option for agency owners who are interested in a merger with a national, independent brokerage. It’s possible that you could merge into an existing branch, or you could become a flagship office location if it’s in a territory where Heffernan is looking to grow their presence.
    • The second option is perpetuation while keeping your existing brand. With our perpetuation solution, the name, staff, and services stay the same, and we can provide support for remaining staff, and new leaders and offer a plethora of key resources to make the transition a success. This includes lead generation, automation, back-office support, insurtech solutions, large account support, business development, marketing and so much more.

START THINKING ABOUT YOUR SUCCESSION PLAN

Heffernan Network offers customized perpetuation and acquisition strategies. Whether you’re looking for a complete agency acquisition or you want to sell the majority of your agency but still retain some ownership, we can work with you to create a plan that matches your vision.

Are you interested in learning more? Start a conversation.