In the midst of the recent record-setting merger-and-acquisition activity among insurance agents and brokers, you may have pondered: Should we consider selling the company, and if so, how can we best prepare to maximize our valuation?

Regarding the first part of that question, it depends on when you need to make your exit — especially if you don't have a younger generation to buy the agency from you. If you plan to leave the business within the next three to five years, consider selling now to capture the current top-tier valuations.

If you plan to be around longer than five years, selling now — even at the current elevated valuations — is likely not your wisest financial move. Even so, think about engineering a transaction a couple years before your exit in case external factors become a sales impediment. However, if your company needs certain market resources that can be obtained only by selling to and partnering with a larger, more robust organization, then you need to pull the trigger sooner.

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Where to start

Notwithstanding when you sell, you will need to focus on some issues immediately to maximize your valuation. Begin with cleaning up your balance sheet and income statement.

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