A Question of Value with David Dillon

Thinking about your home like a potential buyer can be uncomfortable. Some flaws we don’t notice and others we have accepted. However, when you put your home on the market, these things will affect the final price. It is helpful to take a step back and be objective.

This same concept can apply to a business. Potential buyers will look at a business as a function of cash flows and risk. Any flaws become a negotiation opportunity.

Cash flows get most of our attention, but new entrants, changes in carrier agreements, industry consolidation and new forms of marketing improvement also pose big challenges. The risk aspect of the valuation formula is being challenged by new data-privacy and cyber regulations, reputation risk and InsureTech. These factors affect the potential buyer’s perception of the agency’s value.

Think like a potential buyer: How will the new privacy and cybersecurity regulations affect your carriers, suppliers and vendor partners, and how will that impact your product line, service and support and operations?

Action item to consider: List three potential risks that, if fixed, would position the agency to be more successful and gain value.

David J. Dillon, Principal
Watney Insights Group, Inc. 
ddillon@watneyinsights.com
703-648-0584
703-785-9440

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