If you are an insurance agency owner, you may be wondering when the right time is to sell your business. You have invested your hard-earned capital and time into your agency, and making the decision to sell should not be taken lightly.
The first thing to consider if you are contemplating the sale of your insurance agency is if you are ready to move on.
Unless you started your business with the intention of selling it, it is likely that you may not have thought about the exact details of how you will leave your business. This is why succession planning is important for all business owners. This process will help to reveal what your personal and business goals are, and prepares you for the time when you will have to move on from your business. As part of this process, you will determine the way in which your exit will occur – will the business be passed on to family members? Is selling your business to someone in your senior management team an option? Will the business be sold to an external buyer? Once you have determined what type of a transition you want for your insurance agency, you will be able to plan accordingly.
Additionally, there are many other things to consider personally, such as do you have enough saved for retirement? Do your retirement plans rely on you getting top dollar for your business? What will you do once you have left the business? Selling your business will lead to significant changes in your personal life, it is important to assess your readiness for these changes.
It is also key to determine the readiness of your business for sale.
One aspect to consider is how your agency is performing; are you in a phase of high-growth? Has the business plateaued? If your business needs significant reinvestment in order to continue growing, are you committed to this investment? If not, this may be a time to consider selling. Additionally, do you still have the interest to grow your business? If you find it hard to make the decisions necessary to grow your business, or have lost interest in its growth entirely, this may be a good time to consider selling. These signs might indicate that it is time for you to move on from the business.
In order to successfully sell your insurance agency, a buyer will want to see that the business has a history of profitability, a solid balance sheet, defined processes, a stable customer base, and a plan for future growth. If your business is lacking in any of these areas, you may want to consider improving on these issues before considering a sale. Again, you have invested considerable time and resources into your business, so it is important that you do everything you can to maximize your return when the time comes to sell.
A buyer will also want reassurance that the business can run without you. There is value in having a strong management team and defined processes in place so that when the time comes, a buyer will be able to take your place without having negative impacts on the business.
If you have decided that both you and your insurance agency are ready for a sale, the next step is to prepare; it is critical that you put together a team of trusted advisors to help you through the sale process. Your business broker, accountant, and lawyer will all play important roles. Involve them early on, as they will be invaluable resources throughout the process.