Positioning My Agency For Sale

Success is in the details

In October 2021, my employee benefits agency was acquired by Shorepoint Insurance Services, an Acrisure agency partner, and I joined Shorepoint as an associate vice president of Employee Benefits. California Broker Magazine asked me to write about my experience in a four-part series. In the first installment, I shared my reasons for wanting to sell my agency, and the challenges I encountered while building my exit strategy. In this installment, I’ll share the steps I took to position my agency for sale.

There are many steps I am glad I took that helped me to position my agency for sale. Let me say up front that you can absolutely establish, grow and sell an agency without taking these steps — this isn’t a “must do” list. However, having gone through the sale process, I can say that taking these steps allowed me to negotiate the maximum value for my agency and they made the due diligence process as easy as possible for both me and my buyer.

I treated my business like a business.
My agency was incorporated, licensed and insured as a stand-alone corporate entity. There was some additional expense to establish and maintain the corporation, but keeping it as a separate entity allowed me to set up separate banking, accounting and taxes. This made it easy to provide information during the due diligence process and it simplified the transition after the sale.

I kept my accounting up-to-date.
I worked with a CPA, tracked and categorized all of my expenses and ensured that I was meeting all of my tax obligations. I was able to produce a clean Profit & Loss statement for my agency, which helped the buyer understand the overhead they would be assuming, and helped me understand the overhead I would be giving up after the sale. Because I used good accounting software, my CPA and I were able to run reports as the buyer requested them, making the due diligence process as efficient as possible.

I used an agency management system to track policies, commissions and carrier contracts. While entering data often felt tedious (and I eventually outsourced this work), having all of my policy, commission and contract information readily available gave me a clear picture of the value of my agency. I was able to easily communicate valuable information to my buyer: number of groups and policies in force; revenue by group, by carrier, by line of business; revenue in the small group market vs. the large group market. During the due diligence process, I was able to provide information down to policy number, renewal date and commission rate per policy. After the sale, having this information readily available simplified the transfer of my groups to my new agency.

I had a clear understanding of my agency’s value and growth potential. Tracking policy and commission information meant I could project revenue for the next 12 months. I could see which groups were profitable due to organic growth. I could also identify opportunities to sell additional lines of business. With my agency, I knew that my previous 12 months of revenue were not as compelling as my next 12 months of revenue, based on recent account acquisitions and projected organic growth. I was able to tell a compelling story to my potential buyers about the future value of my book of business, supported by my strong network of referral partners and my marketing efforts, including my AlignWomen Podcast. (alignwomenpodcast.com)

Taking these steps gave me the ability to speak intelligently about my agency when I started having conversations with potential buyers. It also gave me confidence that what I was selling had real value. And it gave my potential buyers confidence that they were making a solid investment.

In my next installment, I’ll share how I found the right buyer for my agency.

AMY EVANS is now associate VP at Shorepoint Insurance Services. She has more than 20 years of experience in the insurance industry, simplifying employee benefits for employers and their employees. In October 2021, her insurance agency was acquired by Shorepoint Insurance Services, an Acrisure Agency partner, and is now operating under the Shorepoint name. As an associate VP with Shorepoint, Amy works with employers to help them navigate the complex world of employee benefits, business insurance and risk management.

Amy is passionate about empowering professional women to network more effectively. In 2019, she founded AlignWomen, a leadership and networking organization for professional women. She is also the host of The AlignWomen Podcast, which features female entrepreneurs, leaders and other professionals who have demonstrated agency and innovation in their personal and professional lives. (alignwomenpodcast.com)

Amy is a frequent speaker, writer, podcast guest and social media participant and you can find her engaging regularly on a variety of topics including health insurance issues, entrepreneurship, social media strategies, women’s empowerment and networking with intention.

Contact: 323-633-2263 | amy@shorepointinsurance.com www.shorepointinsurance.com