How to Find Potential Agency Buyers
Why do so many insurance agency acquisitions fail? In many cases, it comes down to not finding the right buyer. You’ve invested your time and life into building your agency. When it’s time to sell your agency, you need to know how to find a buyer for your insurance agency and close the deal. Let’s take a look at how to do just that.
Establish a Real Market Value
Before beginning the hunt for a potential buyer, you should make sure you know the real value of your agency in the current market. Generalized valuations like multiples of revenues may help you in your day-to-day. But when it’s time to make a major move like selling an agency, you need to make sure you get what it’s really worth and avoid letting it sit too long on that market. This can be detrimental for agencies as you’ll see in the next section.
Avoid Public Announcements
How do you sell something without letting people know it’s for sale? It seems quite a dilemma. When you put your agency on the market in a public way, the feeding frenzy begins. I’m not talking about agency buyers. I’m talking about your competition. When your competition sees that you’re selling your agency, they can leverage this bit of information to mislead your clients.
They can twist the facts to make it look like your agency is struggling and looking for a bailout. This could be the furthest thing from the truth and could harm the value of your agency in the marketplace.
Because of this, discreetly reaching buyers is the way to find the right a buyer. We’ll talk a bit more about how to do this a little later.
Steer Clear of “Tire Kickers”
When you’re looking for potential buyers, watch out for tire kickers. These buyers have no real means and/or desire to buy your agency. You can spend 100’s of hours preparing reports, scheduling meetings and otherwise wasting your time and money.
Many people may approach you interested in your agency but these individuals have no real way of funding the acquisition. They have no cash on hand and don’t qualify for loans. Evaluate the creditworthiness of buyers before you get in too deep when looking for insurance agency buyers.
These entities will often demand a lot up of attention up front and then after months, they finally make an offer. It’s well below what you know your agency is worth. Some agency’s sell because they’ve invested so much time and money into the deal but this is a costly mistake.
Screen Out Unscrupulous Buyers
You’ve worked hard to build your agency. You have people who’ve been with you from the start. Just because you’re ready to sell doesn’t mean you’re willing to throw your trusted teams to the sharks.
Know to whom you’re selling. Vet them thoroughly. Review their track record. Understand their intentions. You don’t have to settle for someone who’s going to dismantle and destroy what you’ve built.
Evaluate Niche Experience
You also want to know that a potential buyer understands what they’re buying. No one knows better than you that every niche, region and demographic is different. Someone who’s successful in commercial health insurance in Tampa may not have a clue about Medicare Part D in Phoenix.
Ask questions and get an idea about the experience within the organization. What kind of strategies do they have in place to fill in any knowledge gaps? Do they seem to have at least a high-level understanding of your niche?
Don’t Let Selling Your Agency Interfere with the Success of Your Business
Selling your agency can be a relatively quick and seamless experience or it can be long and drawn out, costing you thousands or more. The reason so many acquisitions fail is because while the seller is orchestrating the sale, they’re letting operations suffer. It’s not intentional. It just becomes hard to be in two places at once. You do enough of that already.
When operations suffer, deals may fall through at the last minute because of a change in enrollment, expenses, staffing or revenues that happened in the interim. When this happens, agencies go back to square one.
How an M&A Broker Helps You Find Potential Agency Buyers
A Mergers and Acquisitions broker can help you quickly and discreetly find the buyer who’s right for your agency. We do all of the screening and negotiating for you so you can continue to focus on running your agency. We protect your confidentiality so that you can smoothly transition your agency to a new owner. If you want to know how to find a buyer for your agency, give us a call.