Is it time to sell your insurance agency?
As a consultant to the insurance industry, I work in many facets of the industry. One my favorites is in the mergers and acquisitions field. Over the past several years I’ve worked closely with many agency owners that were considering a sale. I’ve found that lots of owners have thought about selling. However, the ones that move from thinking to acting have one thing in common – they know why they want to sell. Below are some of the top reasons people decide to sell their organization
|Have you been thinking about selling your agency?|
You are tired of the “burden of ownership”
This one is by far the most common. What is the “burden of ownership?” It’s writing checks. It’s waking up at 2:00 in the morning in a cold sweat. It’s making the hard decisions where it feels like nobody wins. For many people, the burden starts to weigh on you getting heavier and heavier each year. If this is happening to you – you may want to look at selling.
You don’t have a perpetuation plan
This is the second most common one I see out there. Here’s the deal – hiring young talent is difficult. Training young talent – especially producers – is even more difficult. Retaining them is even worse. Because of this I see a lot of companies where the owner is ready to retire and there is no one to hand the agency to. If you don’t have a perpetuation plan and you are planning on retiring in the next five years you should start making one right now. If you are planning on retiring sooner and don’t have one you may have to look at other options.
Your agency needs cash
This is one of the more delicate situations we encounter. It’s embarrassing to many people but it’s important to know that good and valuable businesses sometimes run into problems. Losing one big account can change the whole picture. Sometimes you just need an exit strategy that pays the piper.
You need more resources to grow
This last one is one that I wish more people considered. When I talk to agency owners there are two common barriers to growth. The first is resources. Resources make you more competitive and make you money. However, resources cost money and don’t always yield a strong return in the beginning. The second barrier is overhead. Wal-Mart doesn’t have lower prices because they have lower profits – they have lower prices because they have the power of volume. Sometimes merging with the right organization can solve these problems.
So that’s the first step – you need to know why you might sell. This is so important because now you have the ability to listen to suitors and see if they can offer a solution to your problems. This is also important because it allows you to explore alternatives to selling as well. If you have a perpetuation problem, maybe you just need a good recruiter to help you with a couple of key hires… I know a good one that specializes in the industry if you need a referral. The next step is to identify potential suitors – I’ll cover that in another blog.
So there you go! What do you think – you can leave comments below or as always you can email me directly at [email protected]