As a consultant to the insurance industry, I work in many
facets of the industry. One my favorites
is in the mergers and acquisitions field.
Over the past several years I’ve worked closely with many agency owners
that were considering a sale. I’ve found
that lots of owners have thought about selling.
However, the ones that move from thinking to acting have one thing in
common – they know why they want to sell.
Below are some of the top reasons people decide to sell their organization
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| Have you been thinking about selling your agency? |
You are tired of the “burden
of ownership”
This one is by far the most common. What is the “burden of ownership?” It’s writing checks. It’s waking up at 2:00 in the morning in a
cold sweat. It’s making the hard
decisions where it feels like nobody wins.
For many people, the burden starts to weigh on you getting heavier and
heavier each year. If this is happening
to you – you may want to look at selling.
You don’t have a
perpetuation plan
This is the second most common one I see out there. Here’s the deal – hiring young talent is
difficult. Training young talent –
especially producers – is even more difficult.
Retaining them is even worse.
Because of this I see a lot of companies where the owner is ready to
retire and there is no one to hand the agency to. If you don’t have a perpetuation plan and you
are planning on retiring in the next five years you should start making one
right now. If you are planning on
retiring sooner and don’t have one you may have to look at other options.
Your agency needs
cash
This is one of the more delicate situations we
encounter. It’s embarrassing to many
people but it’s important to know that good and valuable businesses sometimes
run into problems. Losing one big
account can change the whole picture.
Sometimes you just need an exit strategy that pays the piper.
You need more
resources to grow
This last one is one that I wish more people
considered. When I talk to agency owners
there are two common barriers to growth.
The first is resources. Resources
make you more competitive and make you money.
However, resources cost money and don’t always yield a strong return in
the beginning. The second barrier is
overhead. Wal-Mart doesn’t have lower
prices because they have lower profits – they have lower prices because they
have the power of volume. Sometimes
merging with the right organization can solve these problems.
So that’s the first step – you need to know why you might
sell. This is so important because now
you have the ability to listen to suitors and see if they can offer a solution
to your problems. This is also important
because it allows you to explore alternatives to selling as well. If you have a perpetuation problem, maybe you
just need a good recruiter to help you with a couple of key hires… I know a good one that specializes in the industry
if you need a referral. The next step is
to identify potential suitors – I’ll cover that in another blog.
So there you go! What
do you think – you can leave comments below or as always you can email me
directly at sthompson@insurance-csg.com
