Some independent P&C owners wait too long to sell their agencies. They often started the agency from scratch or inherited the business through their families. The agency has done well for them over the years and has provided them with a good life. The problem comes when the owner does not have his “heart” in the business. They are just browsing and not pushing to grow the business.

We have seen agencies where revenues have dropped 15% or more per year for many years. This is not OK. You will find it difficult to ask for a high selling price for your agency. There can be many good reasons why your revenue is falling (i.e. change in carriers, local demographics, etc), but the biggest one is that you typically no longer have the “inner fire” to attract new customers.

When you lose the “fire” it’s time to sell. Don’t wait another day to sell, as you will only lose potential profit when a check is written to transfer the business to a new owner.

Similarly, many homeowners are losing income but failing to bring expenses in line with lower income. The largest single expense category at any agency is wages, salaries, and benefits. You can feel as loyal to your employees as they have been to you. However, you will have a hard time finding good buyers with these additional employees on board. Make the cuts before you start marketing your agency and you’ll be fine in the end.

One of the other dangers of waiting too long to sell is agency owners who don’t want to give up their day job and love affair with their agency. Now he is 75, 85 or even older and has not thought about who will take over the agency if he gets sick. The last thing you want your family to deal with is trying to sell your agency (or run it) while you’re sick and in the hospital. Do you really want that extra load on them?

Many clients will be linked directly or indirectly to the owner himself. So if he’s not there every day in some capacity, will those customers stick around? It is better to have a continuous “handover” over a period of months or years to the new owner. In this way, the customer base that he has created will not feel lost with the new owner.