The Impact of Agency Culture in the Sale of An Agency
- February 09, 2021
For many owners considering selling their agency, their utmost concern is maximizing the sale price. Yet certain owners aren’t as fixated on the sale price and place significant emphasis on how the sale will impact employees and clients. The Buyer’s agency culture can and will have significant impact on employees and clients. A Seller may want to consider how important the following cultural issues are:
- Seller wants (or may be required) to remain active with the agency and wants to work in a culture he will enjoy.
- Seller values employees and wants to make sure they will be happy and engaged after seller departure.
- Seller wants to make sure the agency customers are well taken care of with quality employees.
- Seller may have community and social interaction with employees and clients after the sale.
What a Seller needs to recognize is that once the agency is sold, the seller is no longer in control of this cultural and business asset. Think of it from the perspective of selling a house. Once you sell the house, the buyer might not make any changes, might change the paint and flooring, or could demolish the house and build on the land. The former owner has no say in the matter.
The same holds true of selling an agency. The Buyer may not make any changes, may make smaller changes that have minimal impact on the employees and clients, or could make drastic changes that significantly impact employees and clients. Drastic changes can include changes to compensation & benefits, setting sales goals, aggressive expense management that impairs client servicing, or even terminating employees. While some sellers may not care about these changes, many sellers will feel the impact after the sale.
Sellers, especially those in smaller towns, that socially interact with their employees and clients will certainly hear about these changes. Does the Seller want to be bombarded with complaints after the agency has been sold? If the Seller moves out of town or doesn’t socially interact with the employees or clients, it may not be an issue.
A Seller concerned about the buyer’s cultural impact on the agency should perform due diligence on the Buyer. Find out what the Buyer’s employee turnover and client retention is. If the Buyer has purchased other agencies in the past, speak with the former owners. Speak to some of the Buyer’s current employees to determine if they enjoy working there. Do they consider the position a job or career? Look for reviews of the Buyer online from clients and on glassdoor.com for employee comments.
The Seller doing a little bit of due diligence on the Buyer can help the Seller make the best decision for all concerned.
About the Author:
Jon is the President of Optimum Performance Solutions, LLC (www.optperform.com), an insurance agency consulting firm providing valuation, merger and acquisition, agency perpetuation, strategic planning, and marketing and retention services to insurance agencies nationwide. Jon is on the national faculty of the Society of Certified Insurance Counselors and lectures on agency management topics throughout the United States. He can be contacted at 813-835-7337 or [email protected]
Source: Jon Persky, CIC, CPA, PHR
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