it’s not really worth that, is it? Those high prices you
keep hearing about are usually when a large strate-
gic buyer has purchased an agency because it folds
nicely into its portfolio. They may not apply to your
situation.
So how do you increase value so you will get the
highest price possible? Here are six tips:
1. Find out what your agency is really worth. Hire
a professional to help you assess your firm’s value.
This will give you an objective starting point for im-
proving your agency.
2.Build value in your agency. Invest in new office
systems and improved servicing. Hire top talent; add
producers. This is called organic growth, or sweat
equity, and it’s the best way to increase the value of
your firm.
3.Buy something. You can also grow inorganically
by acquiring a book of business or merging with a
smaller agency. Look for opportunities that make
strategic sense and that you can afford.
4.Become more efficient. Not every revenue dollar
is equal. Look for income streams that don’t cost
as much to support. Consider ways to automate
processes and streamline marketing and servicing.
Reduce unneeded expenses. With each business
decision, ask yourself: “How does this affect my cash
flow?”
5.Groom your successor. Have a plan for how you
will transfer ownership.
6.Don’t wait. Time is a big factor in creating value.
The more time you have, the more value you can
create. Ten years is a good window. Don’t wait until
you’re ready to retire.
Country-club multiples, as I like to call them, are
fun to talk about — but they should never form
the basis for determining the value of your agency.
Resolve to get real about the worth of your agency
sooner rather than later. For questions reach out to
me, David Tralka at [email protected]. Don’t
let opportunity slip away because you failed to build
value in your firm.
| March - April 2019 | KANSAS INSURANCE AGENT & BROKER
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