3 Must Have Wins Before Selling Your Insurance Agency

Selling an insurance agency is a monumental decision, one that can significantly impact your future.

Yet, shockingly, many agency owners navigate this complex process without professional guidance, often resulting in unfavorable outcomes.

Having sold my own agency six years ago, I've witnessed the pitfalls and triumphs of this process.

Now, through Legacy Advisors, we're committed to empowering agency owners to achieve optimal results. We focus on three critical 'wins' that must be realized for a successful transaction: finding the ideal partner, structuring the right deal, and maximizing financial outcomes.

If you're considering selling, buying, or partnering within the insurance industry, understanding these principles is paramount. Let’s explore how to ensure your agency sale is a win on your terms.

[00:01]

A problem that I'm trying to solve for in the insurance industry is a vast majority of agency owners who sell their business each year do so unrepresented without the support and guidance of an advisor or a banker. Many get taken advantage of as a result, and that is a problem worth solving.

[00:20]

I sold my agency six years ago and now our firm, Legacy Advisors, helps agency owners do the exact same thing. Except we focus on three must have wins. If you don't hit on all three, we tell the agency owner they shouldn't move forward.

[00:39]

The first is identifying the ideal partner for them. If you talk to a lot of agency owners who have regret after they sold their business, a lot of times it's "I got good financial outcomes, but I just, I picked the wrong company to partner with." It's really important to make sure that you're asking the right questions, you're preparing the right way, you're identifying the wrong partners for you up front.

[01:03]

In order to move forward, you should not even get an offer for your agency from a buyer that just wouldn't be the right fit. So that's the first and most important W in my mind. The second is the deal structure. If you're an agency owner that's looking to exit in the next one to two years and just get out of the industry, that deal structure should look a lot different than someone who is at an earlier stage and looking to just de risk and continue or level up and try to scale faster.

[01:31]

The deal structure matters from the cash to equity splits to potential earnouts and how those are calculated. So it really matters to align the structure, the ideal deal structure, with the goals of the selling agency. The third is the financial outcome.

[01:47]

We must maximize the value of the business. This is typically the only time that you get to maximize the value that you've built over sometimes generations. We want to make sure that the margins are maximized, not just the multiple. There is so much discussion in the industry about multiples for agencies.

[02:06]

What one person got versus another and how that's possible. There's very little discussion around the margin that that multiple is applied to. So we focus a lot up front making sure that the business is optimized and ready for sale. If it's not, the agency owner should not move forward.

[02:22]

There is no pressure to sell your business. It should be on your terms for maximum value. Those are the three W's. They must all be accomplished in order for the agency owner to move forward. If you are a seller, a buyer, a potential strategic partner who cares about this topic and want to engage, please reach out.

[02:42]

I'd love to connect and talk shop.