Pandemic Put a Pause on the Sale of Your Agency – Now What?
Weddings, graduation parties, and dentist appointments were not the only things put on hold during the coronavirus pandemic. COVID-19 has changed the course of all our lives regardless of whether our personal health was impacted or not. Over the past few months, I have seen firsthand the impact it has had on agency owners who were on the cusp of selling their agency only for the buyers to hit the pause button on the purchase.
Many of the owners were mentally prepared to transition out of their agency and to take a step closer to retirement. For some of these owners, their plans are most likely only delayed for a few months, but for others, it has forced then to consider taking less money for the sale of their agency or to hold off on selling altogether. The most successful agency owners have consistently displayed the following three behaviors in handling the delay:
1. Focus on what you can control.
An agency owner in Pennsylvania was understandably disappointed when the sale of his agency was delayed. He spent months in negotiating and due diligence only to have the deal pulled within days of the expected close date. He quickly pivoted his focus to employees and customers. Rather than dwell on what could’ve been, he chose to redirect his energy on making sure his team had the technologies and tools to conduct business in the work from home environment. He knew he could not control the buyers but he could control the operations of his agency. This focus has made his agency stronger and better positioned for a potential sale in the future.
2. Know your Strength.
An agency owner in Chicago had two buyers rescinded their offers in light of the uncertain future created by COVID-19. He has a unique niche where he is a national leader in his industry. The pandemic has allowed him to reflect on where he wants to take his agency. He realized he loves to sell and does not necessarily enjoy the administrative tasks required, so he is partnering with another agency that will allow him to maintain his ownership while delegating the tasks he does not enjoy. Focusing on growing the business has reenergized him to the point where he is not looking to retire and is coming off his best quarter for new business.
Insurance is a relationship business. For many agency owners and producers, the inability to meet customers and prospects in person made it challenging to service and attract clients. The most successful agencies adapted and utilized technology to service clients and prospects. Video conferencing technology has been around for years and the pandemic forced people to get comfortable using it. The top agencies are now meeting more clients remotely and have revamped processes to transact business more efficiently in a virtual environment. An agency owner who was considering selling his agency is now rethinking, as he has more trust and confidence that his team doesn’t need him micromanaging from the office every day. He has significantly increased the number of client/prospect meetings held, which he believes will lead to increased revenue in the near future.
The COVID-19 pandemic has created challenges that would have been unthinkable prior to 2020. The most successful agency owners have turned these business challenges into competitive advantages for their agency. In turn, they will be most likely be receiving more money for the sale of the agency in the post-COVID-19 environment.
Jim leads the Commercial Insurance Professionals Practice Group. He uses his understanding of the insurance industry to help insurance professionals maximize their prime earning years, develop a discipline around saving those earnings and put a plan in place to best utilize assets. Jim's focus on creating financial blueprints for his clients has earned him recognition as a “Five Star Wealth Manager” by Chicago Magazine.