Can you help me help you…
A Lot of pro bono and underpaid work for people in the insurance industry goes under appreciated and unnoticed. I like to help people, share information and build relationships, so I am often willing to go out of my way to be of service. I’ll be honest though, I get frustrated when people don’t see the value that we add as a transaction advisor.
I’m sure many professional advisors sympathize with my frustration of “Can you help me, help you?”.
If you don’t know me: “Hi, my name is Danny and I’m a workaholic”. I’ve been at this for over 10 years. I love what I do because I get to work with some great entrepreneurs, help people achieve their goals and constantly learn new things all of which are the things that motivate me. After evaluating over 1000 agencies and brokerages, negotiating hundreds of purchase agreements, and managing roughly 100 due diligence processes and closings though, I’ve earned the right to say that I’m an expert. I am fortunate to be in class of only a handful of other people in the country with the same level of knowledge, skill and experience.
As someone that wants to create value for clients, I often ask myself what is our expertise and service worth?
Here are some things I know:
So, I will put this out so everyone understands. How much value would you assign to each of the following?
Let me elaborate on a few points for clarity:
Not only have we completed hundreds of valuations for principals, buyers and lenders, we have a database of hundreds of more completed transactions and have worked with most of the buyers in the marketplace, giving us direct knowledge of how they value agencies and structure deals. While there exists a multitude of buyers in the marketplace for agency sellers, only 20-30% actually close deals and of that 20-30%, only 20-30% of those will be aggressive in their bidding for a particular agency. It’s a little known secret that the most active buyers only close on 1 out of 4 or 5 of the deals they look at. Nearly all of our former clients came to us after attempting to sell on their own and wasted many months waiting to see if one of their buyers would consummate a deal. In nearly every case, we sold the agency for more than they were asking, with better temis and closed the sale in a much shorter time frame.
What is the value of finding the highest price and best terms available, and closing the transaction diligently?
I wish more clients would call us 3-5 years in advance of when they want to sell. Had they done so, we could have helped them improve cash flow and value and/or reduce the taxes incurred from the sale, advice that you might expect your accountant to give. Such recommendations would include:
What is the value of increasing your net proceeds by 10%, 20% or even upwards of 50%?
We have worked with many attorneys over the years. Most of them had been practicing law longer than I have been an M&A advisor. But, as I mentioned, we deal in agency M&A transactions day in and day out, whereas the average attorney has only ever been involved in a few agency M&A transactions throughout his/her career. Your attorney will mostly likely have the legal expertise to negotiate contract provisions, but without significant experience they won’t know what is and isn’t customary nor how to interpret provisions specific to the insurance industry. We also have regular dealings with a lot of lender in the insurance space and, hence, have personal or associated relationships with many firms around the country. Our in house attorney has the experience and specializes in M&A Law.
What is the value of making sure other professionals involved in the transaction are doing their job proficiently?
We do that for our clients, but you have to first help us, help you by letting us do what were good at creating value through the transaction process. It takes a little faith up front but you won’t be disappointed. The money aside, there is value in the peace of mind of having an expert representing you too.
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