September 23, 2008
Selling Your Insurance Agency or Book of Business
I have been approached with this question so many times I am losing count. How much is my insurance practice or book of business worth? To answer this question I will draw upon my experience as a intermediary and bring to light some of the things to avoid when selling your insurance agency, or book of business.
In the first Insurance agency deal I was ever apart of I had a buyer that was looking for a small independent broker. I found one that was doing $232,000 a year in commissions, and the asking price was $585,000 or 2.52 times annual commissions. I knew from my searches that it was difficult to find independent insurance agencies for sale so I encouraged the buyers to make a offer quickly. The seller really liked my buyer and accepted and offer for $550,000 or 2.3 times commissions. Because most books of business sell for 2 times commissions this deal was a little higher priced than most but I still think my buyer got a fair deal, based on his needs and the sellers willingness to carry some of the loan.
Steps to selling your agency or book of business:
1. Get your book of business evaluated by a professional business intermediary
2. Establish a asking price for selling your insurance agency
3. Sign a listing agreement with a qualified business intermediary
4. Shop your deal for multiple offers
5. Accept a offer and begin the negotiation process
6. Negotiate the deal and provide buyer Due diligence documents
7. Finalize negotiations and close the deal
Even though I have outlined the steps to selling your book of business, I don't recommend you go it alone, this can be like representing yourself in a court case, although you may know all the facts better than anyone, you may be emotionally attached to your business and that makes it dangerous for you to go it alone. Call me we will evaluate your book for free, and also help you structure a deal that will get you maximum benefit when you sell it.