October 19, 2023
Selling any kind of business is a big deal. Due to the complex nature of these kinds of assets, it takes a lot of time and effort to prepare, process and finish the sale, and it can be confusing knowing where you should even start.
This brief guide aims to make that process a little clearer. Focusing on businesses in the insurance sector, we explore how you should proceed - from valuation to closing, these are a few important stages to keep in mind.
Before you actually start trying to sell any kind of business, you need to prepare for the sale. This will start off by getting all of the business accounts and documentation in order, so that you know what you’re working with.
Once this is achieved, you can start to carry out a business valuation. With businesses in the insurance sector, this will mostly revolve around your customer base, existing policies, and retention rates. These are the assets that add value to your business, and you need to show them in the best light possible.
Try to also document opportunities for future growth, showing clear avenues for expansion. Potential buyers will be attracted to this, and it’s critical that you paint the business’s future in a positive light.
Early on in the sale process, it’s worth getting help from a range of professional services. You’ll want to get a business broker such as Dexterity Partners on board, a competent account and valuation specialist, and potentially solicitors with experience in the insurance sector.
These service providers will be able to help you create an effective sales strategy. Your broker in particular will help ensure exposure to a range of suitable buyers, while also working on marketing your business in the most effective way possible.
The insurance sector is highly regulated, and you need to make sure that you conduct the sale in a legally compliant manner. Importantly, you’ll need to make sure that the buyer is legally capable of taking over the business, ensuring the data privacy of your client and their ability to provide an effective insurance service.
Getting this right will mean working with a team of legal professionals, to ensure that you get every single detail right. This will take time - it’s not like selling a simpler asset, and you need to adjust your expected timeline with the process accordingly.
Once your business is ready to sell and you’re clear on your position from a legal perspective, you can start negotiating with potential buyers.
Finding buyers for a business in the insurance sector can be tricky, and it might take time to find the right one. It’s a relatively niche sector, and if possible, it’s best not to try to rush it. Be clear on your goals and red lines before you start negotiating - it will make the process a lot smoother, and will strengthen your negotiation position.
By following these basic steps, you can increase the chances that you sell your business with minimal issues. It’s important that you work with the right service providers, to get a helping hand where you need it the most.
