The Basics of Exiting an Independent Insurance Agency

1. Calculating EBITDA

Get a good CPA to help you calculate your agency’s EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) if you don’t know it already. It is a great indicator of the state of your business and will help you set a realistic value for your agency.

2. Determine your agency’s valuation.

In the past, decisions to sell or buy agencies were based on the commissions that the agency brought in. However, the current valuation method is much more accurate, since it also takes into account expenses by focusing on actual profits instead of just income.

Setting a realistic price will make your sales efforts more effective and help you complete your sale faster. Don’t cling to fantastic notions of the value of your company, and stick to the numbers.

3. Determine your tax implications.

With a good CPA and tax expert, and a solid plan, you can enjoy tax benefits when selling your insurance agency. In order to make the most of them, you need to start planning and laying the groundwork a few years before the sale actually takes place, so start now.

4. Finding a buyer.

We believe that the way in which you built your business will attract a specific type of buyer. Learn more about our philosophy and how you can leverage it to increase your chances of selling for a good price.

5. Leaving a legacy.

It took a lot of blood, sweat, and tears to found and grow your agency. Make sure it survives and thrives without you by making sure processes and finances are in order, your staff is well trained and empowered, and the next generation of managers will make the right decisions.