So, you have decided that now is the right time to sell your insurance firm? Perhaps you are ready to retire? Maybe you have lost the passion you once had? No matter what applies, it is important to approach the sale in the correct manner. You can’t afford to make mistakes when it comes to something as important as this. With that being said, below we are going to take a look at the most common errors to avoid when selling your insurance business.
Failing to address the transition period once the business has been handed over
You need to agree on what is going to happen during the transition period before you agree to sell the business. There are a lot of buyers that will expect you to stay on for a number of months in order to help them transition. Of course, your buyer may want a clean break, and therefore, as soon as your signature is on the dotted line you are free. Either way, it is vital to establish this from the offset.
Pricing your business incorrectly
If this is the first firm you are selling, you may price your business incorrectly due to a lack of experience. This is a costly error, as when it comes to how long a company stays on the market, price is the biggest determining factor. It is important to have an effective valuation in place and to ensure that your price is in touch with the marketplace.
Misrepresenting your business
Of course, you want to show your business in the best possible light when you are attempting to attract those interested in buying an insurance firm. However, this does not mean that you can exaggerate or distort the truth. Some owners cover up issues, distort projections, and exaggerate numbers. If you have done this, and the sale goes through, you could find yourself facing legal action.
Failing to pre-qualify buyers
This is another error a lot of people make when attempting to sell their insurance company. Many owners are scared that they will frighten their prospects away by qualifying them too quickly. In fact, the opposite can be true, and, more crucially, you can protect sensitive information about your business from falling into the wrong hands, as you make sure that only serious buyers have access to key information regarding the sale.
Leaving everything to the broker
A lot of business owners hire a broker and believe their work is done. However, taking a hands-off approach is ill advised. No one has more inside knowledge about your company or more motivation to sell than you. Therefore, while the broker may do everything in their power to market your firm effectively, it is still imperative that you are on board.
Not using the services of a broker
Just because you play a significant role does not mean you do not need the services of a broker. A broker can add at least ten per cent to the sales price in most cases. When it comes to something as critical as the sale of your business, having a professional on your side is of paramount importance.