Selling an insurance agency should allow the seller to see the fruits of their labor. But sometimes, selling an agency can be tricky and regrettable. So, before selling an insurance agency, you need to ask yourself whether you truly want to sell it. Answering that question honestly will help define a clear purpose and motivation for letting the agency go, approach the sale with confidence, and prevent regrets in the future. Selling an insurance business is a major decision that requires patience and wisdom. You don’t want to rush to decide to let go of what has taken you years, money, energy, and passion to build. The reason for selling can be inspired by the decision to build another business following a change of interest, letting a new owner better steer the company, spend more time on new endeavors, or engage more in personal interests like having more quality time with family after retiring.
First, when selling an insurance agency, patience is key. Deciding to sell the agency is one thing, and selling it is another entirely. Selling an agency entails a process. People determined to sell will not rush to give the agency away. They will wait for the final signatures to be in ink to ensure the sale lands at the desired end. Wiser sellers choose successors whose goals and intentions align with the agency’s vision and robust financial and management abilities. Thus, the most vital thing in a sale is landing the business at the desired end. This objective is only possible when you know the company’s actual value. However, even with knowing this, many sellers get poor deals due to misvaluing the company to begin with.
At Integra Business Brokers, we have been there and are here to help. We understand that assessing the total value of a business sale requires hard work. Proper valuation and determining a fair asking price can be a stressful process. We help greatly simplify this process. Integra Business Brokers can help you estimate and calculate your agency’s value to get an excellent deal. We help you assess critical factors, including total earnings, the risk involved for the new owner, and your financial plan, to accurately establish the total value of an agency and get the most out of it.
When considering the total earnings, Integra Business Brokers factors in the money the business makes annually to estimate fair pricing. Here, we also calculate the adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization, mainly referred to as EBITDA, by adding all assets and profits and reducing loans, salaries, rent, depreciation, and cost of subtracting the owner, and other expenses. When factoring in the risk involved, we help convince the buyer that they will not lose money after buying. Most buyers understand such risks are expected. And when considering the financial plan, we advise you on the importance of using third-party financing. Savvier buyers prefer this financing because they can gain high enough loans, outbid competitors, and purchase the sale.
After settling on the price, the subsequent struggle is deciding on the mode of payment; the “Lump Sum,” “Over Time,” or “Earn-Out” method. The “Lump Sum” is the most straightforward method, where you will receive all the money at once, and the deal is sealed. However, the buyer is likely to pay less through this method because it is risky for them since the acquisition may fail to bring the anticipated returns. The “Over Time” method relieves some pressure from the buyer since they are contracted to pay an agreed-upon percentage and pay the rest later. Although the money does not come at once, the seller is guaranteed the rest. And the “Earn-Out” is the riskiest method for sellers. Although it offers the highest rewards, the seller gets between 60 and 80 percent of the agreed price and receives the rest only after the business produces the projected returns. Understanding all factors behind all methods informs a better decision.
Integra Business Brokers has successfully brokered sales of many insurance agencies, thanks to our expert advice earned over the years. We cannot wait to add you to our well-served and highly-satisfied clients list. Our pride is to partner with you, see the transition of your agency seamless, and attract maximum returns for you to enjoy the rewards of your labor. We want to help you demonstrate confidence as you take this big step. Our goal is to make the process smooth and straightforward for you. The painful struggle of evaluating the total worth of your insurance business for sale is over. Visit our website, do a few clicks, and you’ll be ahead of the game. After helping you estimate the value, we will take you through strategic plans to get your business to the market, find the right buyers, and agree on a reasonable price.