The Process of Selling an Agency has Changed

Historically owners of insurance agencies were able to estimate the value of their business by looking at their revenue and applying a multiple (maybe 2.5x – 3.0x) to determine what their business was worth.  They would then talk to a few friendly competitors and see which one of them were willing to meet their asking price.  While that is still an option, today a vast majority of the time owners shortchange themselves on price and options because the valuation methodologies for the insurance industry have changed and the buyer pool has expanded greatly over the past 10 years.  Companies that continue to use old methods are putting themselves at a great disadvantage.  Those that adapt, like you have in other areas of your business, are able to put themselves, their clients and employees in a much more beneficial situation going forward. 

Think of all of other areas of your business that have changed and how you’ve (hopefully) adjusted to them.  Agencies don’t advertise and market to clients in the same fashion.  Gone are the days that handing out calendars and putting an ad in the yellow pages are your top lead source.  Now you’ve got to have an online presence, conduct emails campaigns and be more strategic in driving clients to your website to get an opportunity at their business. 

How about your relationships with the carriers?  Do you still have the same pull and interactions with them as you did 10 – 15 years ago?  At some point in almost every engagement with our clients a comment is made to the effect of “It’s just not the same as it used to be.  Everything now is more about what have you produced for me lately.” 

The process of reviewing coverage options for you clients have changed.  I doubt you are still pulling out paper files, gathering information on your client and going from carrier to carrier to gather quotes.  Now everything is uploaded into management systems and comparative raters pull quotes from several companies in a fraction of the time it used to take you to get three or four. 

You probably resisted these changes at first, it’s human nature, but you eventually realized if you didn’t change that the competition would get a hand up on you.  But when it comes to exit and succession planning, which is likely the most important decision a business owner will make other than to become an entrepreneur in the first place, too many owners are relying on 20 – 30 year old methodologies. 

At INS Capital Group we’re like that comparative rater.  We review and put together the key components for a business sale and help you shop multiple options at once to ensure you get the best premium (purchase price) and coverage (deal structure and cultural fit) for your business.

While on the surface it might be stressful that the selling process has changed, it’s actually opened doors for you as a seller that you wouldn’t have had before.  Almost unanimously our clients get to the end of the process and respond, “I never imagined we’d sell for that price and these types of companies would be interested in us.”  That is our goal, ensure you maximize the value of your business and more importantly, have great options to choose from so that your clients and employees are can continue to thrive.