Plan now for the sale of your agency. Implement these four elements to increase the value of your insurance agency:
1. Get your legal ducks in a row – All of your staff should sign a non-compete and a non-solicitation / piracy agreement. The minimum buyer requirement is a non-solicitation / piracy agreement. It is always a good idea to clear any liens or UCC filings well in advance of selling your business.
2. Sales and production – If you are the main producer, it is in the best interest of the agency to either train or hire agents that produce business as well. If you are the only producer in the agency, then your exit strategy is more geared to a buyer that just wants to roll the book of business into their current location. You typically get the highest valuation for having a going concern.
3. Don’t put all your eggs in one basket – If your current book of business is primarily commercial lines property and casualty insurance, having a diverse industry base can limit a buyer’s exposure to risk. Average premium size is also of great concern to commercial agency buyers.
4. Think before you buy or sign – Consider your timeline for selling your agency when signing leases for offices and office equipment. Buyers may not want to take on a long-term lease. They also might not see the value in software, memberships, or other office related expenses that are expensive.
Creating a successful exit strategy for your agency starts now. Proper preparation will help you maximize the value of your agency. It is typically in your best interest to hire a business consultant that specializes in insurance agency mergers and acquisitions.