Through evaluations and trial runs,
sellers can find their weaker points
and improve on those to make
their agencies more attractive to
prospective buyers.
“We do a lot of evaluations, and
you want someone to ask the hard
questions,” he said. “It’s helpful to
have someone - a third party - look at
the good, the bad, the ugly. Our role
is to show how the purchase or sell
fits into an individual’s plan, how to
structure the purchase and determine
price.”
Other aspects potential sellers should
consider are housekeeping items,
including making sure their financial
records are in order, including
revenue breakouts.
“The agencies that have the best
chance of selling are the ones where
the house is in order,” Buchman said.
“They’re ready. They’re there. When
they request records, it’s ready to go.
If you struggle to get information,
that’s a red flag, or it should be. It
plants the wrong seed in a buyer’s
mind.”
Technology and its role in the agency
is also a selling point, he said. An
agency that features direct billing,
and auto drafts from bank accounts
are often valued higher than those
where customers drop off a check at
the office. Not only do direct-billing
agencies usually receive a premium,
but sell better.
“As part of the plan, you want to
look for people you respect,” he said.
“Most owners truly look out for their
customers, and want to take care of
them and the people working for
them. It’s really important to look at
who’s growing, and who you respect.
If you sell to the highest buyer, that
might not often be the best decision.
After the sale, you’re still probably
going to live in that community. You
want to be able to go out with your
head held high and feel good about
the choice you made. It’s not that
hard to find someone to consider
selling to. It’s a small enough world,
and agents typically know who would
be a good fit for them.”
While no two transactions are the
same, Buchman said the typical
length of time to close a deal is usually
around 90-120 days. Some deals take
more time, some take less depending
on aspects such as agency value. While
some agents believe they already
have a hard number of their agency’s
worth, Buchman warns against using a
rule of thumb.
“Rules of thumb are dangerous,” he
said. “A lot of sellers have a fixed
number in their heads. Rules of
thumb are a good guideline, but they
could be dangerous.”
“It’s never too early to start planning,
even if it’s a basic plan,” Buchman
added. “Because you never know what
will happen down the road.”
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“It truly is a seller’s market right now,”
he said. “But you have to ask yourself,
‘Are you behind, or are you current?’”
When considering the idea of selling,
Buchman recommends searching out
agents that are highly-regarded and
admired.
6811 Shawnee Mission Pkwy, #312
Overland Park, KS 66202
(913) 677-1550 | www.nasonassoc.com
Providing aviation insurance coverage for more than 50 years
|MAY - JUNE 2016| KANSAS INSURANCE AGENT & BROKER
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