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MYTH #6: The Easy Sale is the Best Option


BOUT THE AGENCY & OWNER Specialty agency Midwestern Location Agency resold for double the initial price Henry founded and grew a successful agency for decades in the Midwest. He sold his company directly to his largest client for simplicity. The new owners revamped the business. The new owners resold the agency with ABC's help for double their initial price.

Henry founded and built a specialty insurance agency in the Midwest. He had a great deal of experience in his niche industry and he drew on that expertise to grow a successful agency for decades. As he approached retirement, he sought out a means to perpetuate the business.

He decided to sell to his largest client; a company he had known for years and with whom he had an excellent relationship. The client knew his staff and industry and its principal was a successful entrepreneur. Henry trusted that the client would be a great long-term successor and provide stability to his team. Due to the close relationship with the client, Henry never sought outside advice on the deal and ended up selling well below market value.

The new owner spent a few years post-acquisition cleaning up the operations and records and then sought out ABC for an evaluation. After a discussion of the valuation, the owner decided to move forward with putting the agency on the market.

Unlike the agency’s predecessor, the new owner received multiple offers from larger firms. The end result was a sale to a firm that had a large practice in the same specialty and paid twice what the owner had paid for the agency a few years prior.

 Key Takeaways Know what your agency is worth. Before selling, seek out the advice of an M&A firm with expertise in agency valuations and sales. Go to Market. Avoid solely relying on personal connections for a sale. Go to market and solicit offers from a variety of strategic buyers to explore your options. Engage a professional advisor. Partner with a reputable M&A firm to navigate the sale process so that you realize the highest value and highest level of success for your firm. What can we learn? The “easiest sale” is often not the best option.

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