If you have come to the conclusion that the best move for agency perpetuation is to sell, then you need to go about the process carefully. A sale can be of huge benefit to both the seller and the buyer when it is done correctly. However, it is easy for the sale to go wrong if you are not careful, and this can result in a disappointing deal for either party, a loss of long-standing clients, and expensive litigation later down the line. With that in mind, read on to discover the top ten considerations when selling your agency.
How much money you need
When thinking about selling your agency, you need to think about how much money you need to retire, as well as how much your agency is worth. A lot of owners need the sale of their agency to keep them in their lifestyle for the next 30 years. It is, therefore, crucial to set your minimum expectations going forward – make sure they are realistic, though.
Your agency’s worth
Next, make sure your agency is worth the price you are asking. You need to support your asking price, and this typically involves some house cleaning, for example, getting your balance sheets in check.
Managing your ego
It is vital to manage your ego during the sale. Remember, your agency is a business asset; it is not your child.
You also need to think about how your employees are going to be treated in a sale. You need to consider the fate of your staff under new ownership. In some cases, it can be better to move to bonus them out, so they retire with you.
Your clients have also contributed to the growth of your agency, and they need to be considered during the sale. You should introduce them to the new owner so that they feel comfortable.
It is a good idea to use confidentiality agreements so that you can entertain buyers yet keep it quiet that you are selling your business. If a potential buyer doesn't agree to a confidentiality agreement, don’t do business with them.
Prepare a prospectus
You should also prepare a prospectus. This is a printed document that is sent to anyone interested in buying your firm, advertising the potential investment. It gives buyers the ability to make an offer legitimately.
Locating buyers can be difficult. Start with people you know and trust. It is important to ensure you are in control, not the buyer.
Balance sheet liquidity audit
Make sure that part of the sale agreement is a balance sheet liquidity audit. This is a binding agreement that makes sure the buyer has the liquidity of the agency until they officially own it.
When do you leave?
Last but not least, the all-important question, when do you leave? This is entirely up to you. Some people want to retire straight away; others prefer to continue as a manager or a producer once the business is sold.