THE SELL IT NOW AND COME WORK FOR US MYTH
Agency Consulting Group, Inc. and other consulting firms make a really good living from assisting agents who have sold their businesses and gone to work for their acquirers to re-acquire their businesses and start new agencies.
I once heard a business owner say, “The worst day I have ever had running my own business was better than the best day I have ever had working for someone else.”
We sort of lose sight of that when we sell our agency to an acquirer and go to work for them for a handsome salary. But the salary becomes meaningless quickly if stresses and pressures are put on you that you have never had to experience before or when you are asked to do things to your staff, clients and/or carriers that you find less than acceptable. You must also be careful of offers that appear too good to be true – they often are. Unfortunately, we have experienced many situations as Expert Witnesses on insurance agency disputes with contingent clauses that change the terms of the price and compensation agreements under certain conditions and circumstances.
You must judge your ability to be “managed” by a new employer, individual or large corporation. If you have been an employee earlier in your career, judge by your experience. If you have never been an employee, make sure of your authority and responsibility levels and that you don’t become just another employee after the ink has dried.
If you have lost faith in your business, in the agency business or in the insurance industry, selling or merging your agency is a perfectly good way of cashing out your investment. But be sure that you are financially sound enough that if you hate the resulting employment status you can walk away clean without litigation or the need to re-purchase your agency. But most successful agents should not even consider the sale of their agencies unless they wish to retire, or their health or personal condition requires it, or they have run out of energy to be a business owner. This does not include internal perpetuation in which the old and new owners work together as before, but with a transitioning ownership role over time. And, if an agency sale with an employment agreement sounds too lucrative to avoid, make sure you have appropriate ‘Escape Clauses’ in your contract. Becoming an ‘instant millionaire’ should not include a contract of Indenture. Slavery is still illegal – do not bind yourself to the point that you cannot be bi-laterally released from the agreement.
Reprinted from The PIPELINE, the national newsletter for agency principals. The PIPELINE is published by Agency Consulting Group, Inc., a leading consulting firm for independent agents in the U.S. for over 30 years. Call 800-779-2430, E-mail info@agencyconsulting.com, or visit www.agencyconsulting.com for information about the content of this article or PIPELINE subscription information.
