Springtree Group offers a unique perspective from having developed, managed and sold our own insurance agencies. We are 100% committed to providing new and fresh options to insurance agency owners that will not be found with any other organization. The market for independent agencies is hot! Call (972) 395-8811 for a free consultation.

If you are considering selling your insurance agency, here are five common missteps to avoid.

1. Being lax about confidentiality. Don’t give out personal or company financial information, or any information that is proprietary to your business, without first having the prospective buyer sign a Confidentiality Agreement. Be sure to include non-interference provisions as an added safeguard, so that interested parties can’t poach your clients or staff. You also want to keep your transition plans private between yourself and your lawyer, accountant and business intermediary. Sharing your thoughts to employees about selling the agency could result in folks walking out before the new owners walk in.

2. Not knowing your business valuation. Don’t rely on the buyer to tell you what your agency is worth. Hire an experienced third-party consultant to provide a written valuation of your business, using the appropriate method for an independent insurance agency. Consider also withholding your asking price until you receive an offer. A well-informed buyer will make a fair proposition, and you can always negotiate up. But, if you ask too little from the outset, you could miss out on profits when the sale goes through.

3. Failing to pre-qualify prospective buyers. Just because someone has expressed interest in acquiring your agency does not ensure they have the means to seal the deal. A competent business intermediary, like Springtree Group, can vet prospective buyers to determine whether they have the financial capacity to complete the transaction. This includes gathering banker’s reports, balance sheets, P&L statements, and credit references to determine whether the interested party can qualify for a loan to finance the acquisition. The inability to secure financing is the number one reason deals far apart.

4. Not knowing the tax impact of the sale. How your business is structured can have a dramatic impact on the tax implications of the sale, which can result in more—or less—money in your pocket. Talk to your tax accountant about the pros and cons of your current structure and whether it would be wise to make a change prior to listing your insurance agency for sale. Although modifications to your ownership structure can take a couple of years to solidify, this kind of advanced planning can add to your profits in the long run.

5. Negotiating directly with the buyer. Few people would consider selling their home without the help of a knowledgeable realtor, and selling your insurance agency is no different. An experienced business intermediary will know how to get the most value from the sale of your agency and ensure that the buyer is above-board in all of their dealings. What’s more, a business intermediary won’t let heightened emotions get in the way of smart decision-making, and can leverage relationships with banks and niche lenders to arrange the best financing terms for the business transfer.

Springtree Group works with independent agency owners nationwide to facilitate the sale of their business and specializes in agencies with less than $5 million in annual revenues. We maintain confidentiality at all costs and can assist with every facet of the business transfer, from qualification and negotiation to due diligence, financing and closing. If you are considering selling your insurance agency, you need to know what it’s worth. Call (972) 395-8811 or contact us online to request a free agency appraisal today.