We are in an unprecedented market, and it’s likely we’re all experiencing it in one way or another. Our industry remains dedicated to helping clients navigate rising premiums and reduced appetite for taking on risk, stemming from a global pandemic, inflation, supply chain disruptions, staffing shortages, natural catastrophes and more.

However, as Chief Development Officer for PCF Insurance Services, one of the largest insurance brokerages in the U.S., I’m experiencing another economic phenomenon not seen in our lifetime: high interest rates and high multiples — at the same time. These factors are almost always opposing — that is, if rates are low, owners can command higher multiples or top dollar for selling their insurance businesses, and vice versa. As such, gone are the days when banks were lending capital at a pace that kept up with the high volume of M&A transactions.

With deal counts down, interest rates up and multiples still high, now may be a good time to sell your insurance business. However, this favorable environment won’t last forever. In fact, it may not even last through the end of the year.

So, if you’ve been considering selling your insurance business and want to take advantage of this unique moment in time, focus on the following key areas to help maximize your return:

1. Prepare comprehensive financial and operational records. In addition to financial records, ensure your operational procedures, employee manuals and business processes are up to date. This will help a potential acquirer understand your business and ensure a smooth transition should a transaction occur.
2. Embrace technology. Digital platforms and AI play a vital role in the day-to-day operation of almost every business, and that’s especially true within our relationship-focused industry. The right platforms and processes help ensure effective communication between team members and with carriers, clients and other stakeholders. Technology is pivotal to the growth and longevity of your business. This will be an important consideration for any potential buyer.
3. Value your business. Researching recent sales of similar insurance businesses and understanding industry benchmarks to set a competitive price will be crucial. Insurance businesses that consistently demonstrate a client-first approach and long-term growth will ultimately get higher multiples.
4. Create a road map for a smooth transition. One of your top concerns is likely ensuring your employees and clients are taken care of post-acquisition; therefore, be sure the buyer has a solid plan and proven track record for a smooth integration.

Focusing on growth & partnership opportunities
A strong growth strategy centers on attracting teams with high-growth potential in target industries and markets with the ability to enhance a firm’s offerings. It is important to value businesses that strengthen a firm’s core competencies and align with its entrepreneurial culture and corporate expectations.

Digital technology can play an important role in empowering a team to deliver world-class service, so look for a company that invests in technology and infrastructure as part of its growth strategy. And most importantly, explore how they integrate people, processes and platforms, to create a stronger, more unified organization. The sharing of knowledge between team members about carriers, technology, industry trends, and more creates synergies that help increase a company’s ability to service its clients, grow and expand their capacity.

If you’ve been thinking about selling your insurance business, now could be an ideal time to find the right strategic buyer that can provide you with opportunities for growth and help your business ascend to bold, new heights.