Selling Your Insurance Agency | Digital insurance

We are in an unprecedented market and we are all likely to experience it in one way or another. Our industry remains dedicated to helping clients navigate rising premiums and reduced risk appetite as a result of a global pandemic, inflation, supply chain disruptions, staff shortages, natural catastrophes and more.

However, as director of development for PCF Insurance Services, one of the largest insurance brokerages in the U.S., I am faced with another economic phenomenon unseen in our lifetime: high interest rates and high multiples—in the same time. These factors are almost always opposite—that is, if rates are low, owners can command higher multiples or top dollar for the sale of their insurance businesses, and vice versa. As such, gone are the days when banks lent capital at a rate that kept up with the large volume of Mergers and acquisitions transactions.

With the deal countdown, interest rates rising and multiples still high, now may be a good time to sell your insurance business. However, this favorable environment it won’t last forever. In fact, it might not even last until the end of the year.

So if you’ve been thinking about selling your insurance business and want to take advantage of this unique moment in time, focus on the following key areas to help you maximize your return:

1. Prepare complete financial and operational records. In addition to financial records, ensure operating procedures, employee handbooks and business processes are up to date. This will help a potential buyer understand your business and ensure a smooth transition should a transaction occur.
2. Embrace technology. Digital platforms and artificial intelligence play a vital role in the day-to-day running of almost every business, and this is especially true in our relationship-focused industry. The right platforms and processes help ensure effective communication between team members and with carriers, customers and other stakeholders. Technology is critical to the growth and longevity of your business. This will be an important consideration for any potential buyer.
3. Appreciate your business. Researching recent sales of similar insurance companies and understanding industry benchmarks to set a competitive price will be crucial. Insurance businesses that consistently demonstrate a customer-focused approach and long-term growth will ultimately achieve higher multiples.
4. Create a roadmap for a smooth transition. One of your primary concerns is likely to be making sure your employees and customers are taken care of post-purchase; therefore, make sure the buyer has a solid plan and a proven track record for a smooth onboarding.

Focus on growth and partnership opportunities
A strong growth strategy focuses on attracting teams with high growth potential in target industries and markets with the ability to enhance a firm’s offerings. It is important to value businesses that reinforce a firm’s core competencies and align with entrepreneurial culture and corporate expectations.

Digital technology can play an important role in empowering a team to deliver world-class service, so look for a company that invests in technology and infrastructure as part of its growth strategy. And most importantly, explore how it integrates people, processes and platforms to create a stronger, more unified organization. Sharing knowledge among team members about carriers, technology, industry trends, and more creates synergies that help increase a company’s ability to serve its customers, grow, and expand capacity.

If you’ve been thinking about selling your insurance business, now could be the ideal time to find the right strategic buyer that can provide you with growth opportunities and help your business soar to bold new heights.