A question for every agency owner, whether planning, growing or selling.
By Mike Brady
While it would be natural for the owner to be disappointed or feel like he’d been outflanked by a savvy buyer, perhaps the reality is different. If the owner had done more due diligence and had a thorough valuation determined, each of those costly, yet very fixable vulnerabilities would’ve likely come to light and could have been remedied before the selling process even began. In effect, his attempt to take an easier path cost him as much as a million and a half dollars.
This kind of mistake is much more common than most agency owners realize. We’ve seen it again and again. Unfortunately, there is no way to fix it later or even during the selling process. What’s done is done.
The Solution What’s the alternative? Owners must really know the value of their agency. Valuations are not just for transaction purposes, they identify risks and vulnerabilities while there’s still time to address them. They can also educate owners so they are as savvy and prepared as the buyers who will be combing their books. The old saying is still true – it’s never too early to plan ahead. And it’s never too early to begin to build toward an exit strategy that maximizes your take-away.
In addition, valuations can play a role in planning and growth. Having a current valuation is
not only a good tool for strategic planning (such as succession and continuity) – but can also be used to help secure financing quickly for unexpected opportunities, like to acquire talent or assets. It’s quite common for a valuation to speed up financing by allowing your lender’s underwriters to quickly understand and verify the value of the agency. This speed can provide a first-mover advantage over competitors who are not prepared.
In short, a skilled and thorough agency valuation can also assist you in both planning and growing your agency. This planning can be leveraged in increasing both the present and future value of your agency.
ABOUT THE AUTHOR
Mike Brady is a partner of Brady Financial Group in Exton, Pennsylvania and provides outsourced financial resources to help business owners identify and solve their financial and business challenges. Mike’s twenty plus years in the industry as both CFO of a top 50 regional broker and partner in Brady Financial Group provides him a unique perspective to the agent/broker industry. The firm provides part-time or interim CFO services as well as engages on specific projects where management requires additional financial expertise. For more information, call 484.653.6280 or www.bradygrp.com