Don't Wait: The Value of Early Agency Valuation
Grow, Hold or Sell? The Answer Starts With Valuation
Many insurance agency owners wait until they're ready to sell before getting a valuation. This is a critical mistake that can cost you significantly—both in missed opportunities and in final sale price.
Valuation is a Business Strategy Tool, Not Just an Exit Signal
One of the core goals at INS Capital Group is to assist business owners with perpetuation planning. Most people think perpetuation planning means getting ready to sell within the next 6 months, which couldn't be further from the truth.
Perpetuation planning is simply good business strategy. Stephen Covey's famous quote in "The 7 Habits of Highly Effective People" to "begin with the end in mind" perfectly captures this approach. For business owners, early valuation and exit planning provide a roadmap. Gaining a true understanding of what drives your agency's value will help you make better decisions throughout your journey as a business owner. You'll become more profitable and efficient, which will allow you to attract and retain higher quality clients and employees.
Different Paths for Different Goals
We've had clients decide to sell their businesses in their 30's and 40's, while others over 70 weren't quite ready for that transition. Neither approach is inherently right or wrong, because each business owner's needs and aspirations are different. The first part of our process with clients, regardless of the engagement, is to discover what they're hoping to accomplish and on what timeline.
When deciding whether to grow your business (through organic investment or acquisitions), hold steady, or sell, the answer will be different for everyone, depending on their personal, financial, and professional goals. However, the foundation for making any of these decisions starts with an accurate valuation.
Start With a Strategic Market Analysis
No matter where you are in your ownership journey, it's essential to establish a baseline of where you stand today compared to your peers and identify key areas to focus on going forward. INS Capital offers a Strategic Market Analysis that compares your business to others of similar size and provides feedback on how you compare on growth, profitability, operational efficiency, compensation and benefits packages for employees, and how key carrier statistics impact your business's value.
As John Wooden said, "Never mistake activity for achievement." On a weekly basis, we witness business owners grinding away on areas of the business that have minimal impact on growth and profit. Getting a valuation early helps you focus your attention on high-impact areas that will provide additional profit to:
Invest in the business (for organic growth or acquisitions)
Realize more personal income today
Maximize the business's value when it's time to transition, whether internally or externally
How Valuation Informs Your Path Forward
GROW
A current valuation helps buyers set realistic growth targets. We've worked with owners who discovered their agency was worth more than expected, allowing them to adjust their timeline and acquisition strategy accordingly.
Understanding the impact of smaller acquisitions on your total business valuation helps you prioritize closing acquisition opportunities that will maximize your overall value before your own sale.
HOLD
A valuation might reveal that your purchase price expectations are miscalculated or that the net proceeds would be too low for you to sell now. Owners often only look at the headline price, not how it's structured (cash, stock, seller note, earnout) and how taxes impact the actual cash received at closing.
You might discover you've missed the ideal window to exit within the preceding 12-24 months, and waiting for the next favorable market cycle makes sense.
A valuation could reveal that working on a few specific items over the next few years would lead to an outsized return on your eventual sale price.
SELL
Valuation shows your agency is 3-5 years from peak value, allowing you to plan your departure timeline
Your metrics already look ideal to maximize the purchase multiple
Market timing aligns with your personal goals (capital flowing, buyers active)
Valuation reveals your agency has hit a ceiling and needs additional resources to reach the next level
The key to maximizing your options isn't waiting until you're ready to exit—it's getting a professional valuation now, understanding what drives your agency's value, and making strategic decisions with the end in mind. Whether you ultimately grow, hold, or sell, the path to success starts with knowing your true value today.