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3 Important Questions to ask a Buyer when Selling your Insurance Agency

Updated: Jan 31



As much as buyers are evaluating you and your business in the journey to a sale…

it’s important to remember to evaluate them as well.


Asking the right questions of the buyer is a critical step to eliminate the wrong options so you can close with confidence.


Here are 3 important questions you should have answered:


1. How would you describe your day 2 culture?


Selling your business is personal. It’s important that you’re talking to buyers who not only address your financial goals but also fit your culture.


Day 2 culture aspects to get clear on:

  • Employee expectations: What your employees can expect in terms of training, support, and resources

  • Values: The buyer’s core values and mission

  • Business Environment: How collaborative and autonomous the business environment will be

  • Future vision: The buyer’s vision for growth and the future of the business

You should only proceed with buyers you see yourself and your team working with.


2. Can you describe how you might structure a sale in terms of compensation, stock and earn outs?


Every sale can be structured differently. Understanding how a buyer might structure the sale can help you ensure they only have conversations with buyers who can support their financial goals.


There are five financial components of a deal to get clear on when evaluating various structures:

  1. Cash at close

  2. Stock at close

  3. A future earn-out

  4. Ongoing salary

  5. Commissions

Interested buyers should be willing and able to pull on these five levers to create a structure that meets your financial goals. For example, if your business is growing fast, an attractive earn-out rewarding future growth should be important to you.


3. What sort of changes will take place to my brand, people or process post-sale?


Every transaction comes with some change post-sale. Some sellers welcome change, while others prefer to remain as autonomous as possible.


Here are a few specific items to address with potential buyers about post-sale changes:

  • HR, IT, Admin: Who will handle HR, IT, and administrative tasks?

  • Team & Expectations: What team members will I work with directly, and what do expectations look like?

  • Branding: What sort of branding changes can I expect?

  • System Migration: What systems need to be migrated?

  • Implementing Change: How will changes to processes be implemented?


Selling your insurance agency is a big deal. Asking the right questions is a critical step to ensure you sell your business with confidence.


 

Max Olson is a partner at Legacy Advisors, focusing on M&A advisory services for insurance agencies. Max and his team support agency owners throughout the acquisition process, guiding them to a successful transaction. Agency owners interested in learning more about the process can connect with Max at max@legacy-advisors.com or hear from clients he has worked with at www.legacy-advisors.com/resources.

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