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What To Consider When Planning The Future of Your Insurance Brokerage

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​As more and more of the insurance workforce ages, we’re seeing an increase in the number of family-owned brokerages being passed down to family members, and a number of independent firms are considering their options when it comes to third-party buyers.

Every sale and acquisition of an insurance brokerage comes with its own logistical and cultural challenges, and choosing to part with your company can often feel like you’re closing the door on your whole life’s work.

Additionally, economic uncertainty, fluctuating interest rates and volatility of financial markets have a negative impact on the M&A sector. As a result, brokers are expected to move cautiously. If you’re thinking about parting ways with your brokerage, here are a few things to consider when planning your exit strategy.

Take your time

The saying goes, “good work is done with dignity, and there is no dignity in rushing,” and this is most certainly the case when it comes to selling your brokerage. It’s understandable that brokers don’t want the sale of their company on their shoulders, but it is vital that the M&A is undertaken with due diligence, otherwise problematic legal issues may surface after the deal has been done.

In order to get the best sale possible, you need to get to know every nitty-gritty detail about your brokerage, so that you can get it into the best shape possible before you sell it. From ensuring all your paperwork, books and records are up to date, to spending time strengthening your client and employee relationships, the more effort you put into preparing your company for sale, the more value your business will have to a potential buyer.

This is something Michelle Mondorf, senior associate at Loopstra Nixon LLP echoes, saying,“For M&A transactions, it’s important to make sure everything is done properly and to take some time doing the due diligence to ensure the transaction is a good fit that works for both parties.”

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Choose the right partner

If you’re thinking about selling your brokerage but don’t want to exit the business immediately, or you want your company to maintain its legacy, you’ll need to find the right partner to pair with. The partner you choose needs to do more than just buy the business - they need to add value, which is why it is so important to get it right. 

If you’re unsure of how to find the right partner, then you should consider getting a neutral third party involved to help you find candidates. Whether you want to take a step back but still have involvement in your company, or partner up with someone and exit later, or cut ties and retire, you need to find someone who will work with you. We know it’s a complex and time-consuming process, which is why we work closely with a broad range of firms looking to acquire. Because we’re an independent introducer, we will have your best interests at heart, and will help you to find and complete the right deal.

Strengthen your workforce

Your employees are your most valuable asset, so it’s vital that you do all you can to ensure they’re protected. After all, many small firms have people who have dedicated their lives to help build your business and will feel like a second family. It’s also quite common for brokerages to have a family history that can date back decades.

Additionally, the insurance industry is in the midst of a skills shortage, with 50% of general insurance firms stating they’re suffering from a skills shortage, if you’ve got loyal and experienced employees, your firm will be much more attractive to prospective buyers.

In some instances, it might make sense to hire fresh talent who can bring a wealth of clients with them as this will make your business more profitable, and again more attractive.
With over 150 years’ worth of combined experience, our team of expert General Insurance Consultants possess unrivalled knowledge when it comes to helping Insurance Brokerages succeed, whether through tailored recruitment campaigns, specialist Broker Consultancy or advice regarding M&A. If you’re looking to drive the growth of your business, we have an enviable record of matching exceptional candidates with successful companies, with over 97% of placements still in place after 5 years. Get in touch today.