“Should I stay or should I go now?
If I go there will be trouble
And if I stay it will be double
So come on and let me know…”
-The Clash (Mick Jones)

The decision of whether to “sell now or later” is top of mind for many Title Agency and AMC owners these days. It can be a life-changing decision and not one to be made lightly.

Our current activity level suggests a renewed sense of optimism within both the title and AMC industries. Many owners feel that there finally is light at the end of the tunnel and that the worst of the recent low transaction volume environment is over. Having suffered through the last two years, why sell now, just as things are about to start getting better?

“What” and “why” are two of my favorite words. They promote focus, and with that clarity. What is the problem to solve, and why? What matters most to you?

Clarity on your goals is a logical first step in deciding whether to sell now or later. From there, prudence dictates gathering information for evaluation purposes, as well as considering consequences.

As the leading Investment Bank focused on M&A in Title and AMCs in the US, we have the advantage of deep industry insight. We’ve seen it all. This blog shares information about what we are seeing in today’s market and suggests factors to consider in assessing timing of a sale, with a view in mind towards helping title agency and AMC owners weigh their options and answer the questions posed above. The best decisions are those which are fully informed.

SELL NOW CONSIDERATIONS

Some title agency (and AMC) owners fear disintermediation due to technological advancements and scale. They worry about how long they will be able to effectively compete with larger title entities (both large independents and the directs of the Underwriters). Others simply seek to monetize their life’s work and ease into a semi-retirement role, while maintaining career opportunities for their employees and an income stream. If this is your mindset, then selling sooner than later is worth considering.

As is often the case, timing is everything.

We always advise owners that it is prudent to sell before you want to sell.

Here’s why:

1. Planning for Maximum Value: A business is generally worth more when it’s operating at its peak, with strong financials, a good management team, and solid growth prospects. If you wait until you’re ready to sell, you might be selling at a time when the business isn’t at its best, reducing its market value.
2. Preparing for the Sale Process: Selling a business can take time − sometimes months. By starting the process early, owners have time to clean up financials, resolve operational issues, address any structural issues (including optimal tax planning) and make the business as attractive as possible to potential buyers. The earlier you prepare, the more control you have over the timeline and the outcome.
3. Avoiding Emotional Decisions: The decision to sell can be emotional, especially if you’re attached to the business. By considering selling before you’re “ready,” you might be able to approach it more rationally and strategically, instead of rushing into a decision due to personal reasons or external pressures.
4. Market Timing: The business market fluctuates. Right now, there are not many good title/AMC companies for sale. We have a panel of motivated buyers, flush with cash, eager to invest to be ready for the inevitable next economic expansion. Things might look very different in another market, where there could be many companies seeking to sell.
5. Smooth Transition: If you wait until you’re ready to exit, it might be too late to ensure a seamless transition for the new owner. By planning ahead, you can put systems and leadership in place that will make the business easier to hand over and help maintain its value post-sale.
6. Optimize the opportunity. I’m enamored with the word “optimize.” It feels like the buzzword of 2025. If you want to get the most out of your business’s sale (optimize – I can’t say it enough), then you would sell earlier than might be obvious. Simply put, selling a few years before you think you want to exit the business will produce a greater result. Here’s why:
   1. Buyers usually don’t pay the full purchase price on closing. Some of the purchase price may be in the form of an earnout which is paid over time, but only if the business performs as expected. That way the “risk” of the business’s volume sustainability becomes that of the seller. Assumption of risk is accompanied by reward, so that if the seller takes that risk, the buyer doesn’t, and that means more money for the seller. As a seller, you want that. Conversely, if the seller wants ALL the sale proceeds to be paid at once on closing, then that means the buyer is going to wear the risk of how the business performs over the first few years or so. If the buyer assumes that risk, then they will want to be paid for that — which is reflected in a lower purchase price.
   2. The amount of the earnout varies but often starts at 20% of the value of the business for two years. The earnout typically only gets paid if the business produces results (usually revenue or EBITDA) at a negotiated target. (Beware of those who promise high Enterprise Values based on targets you may not achieve).
   3. Because title is a relationship driven business, it’s critical to allow enough time for the new owner to take over the relationships which drive existing volumes. That happens during the earnout phase.

A common concern for sellers today arises from the tough economic conditions we’ve just navigated. After enduring a challenging period, many sellers wonder: If they sell now, will they miss out on the potential expansion and growth that everyone anticipates is on the horizon? This is a valid concern, but the short answer is: not necessarily.

We’ve developed an innovative deal structure that allows sellers to benefit from future growth, while ensuring fairness to buyers. The structure ensures that both parties get a fair deal, while giving the seller the opportunity to participate in the upside potential as the market rebounds, beyond typical earnouts.

We understand that sellers want to be confident they’re not leaving value on the table, especially after holding on through a period of uncertainty. Our approach gives sellers the best of both worlds − allowing them to cash out in the present while still positioning themselves to capitalize on future growth. It’s a win-win scenario that doesn’t require a seller to wait out the expansion cycle or gamble on timing.

Our strategy is not just theoretical; it’s been proven in practice. We’ve used this structure in various transactions, and it has consistently delivered favorable outcomes for all parties involved. So, while the growth cycle may be just around the corner, with the right structure in place, a seller can sell today and still share in the future success. Our strategy works, and it’s built on years of experience and successful deal-making.

SELL LATER CONSIDERATIONS

“Nothing is certain except death and taxes.”
-Benjamin Franklin

A common refrain we hear is that it might be better to wait for the business to grow first and then sell. The thinking is that the sale price will be higher because the business earns more money down the line.

In order to evaluate this line of thought properly it is important to be crystal clear on how value of a title agency (or AMC) works.

Value is based on three elements as follows:

1. EBITDA;
2. Multiple of EBITDA? (How far back do you go?); and
3. Terms.

There are many ways the base EBITDA could be calculated. The goal is to determine what the business’ volumes are likely to be on a sustainable basis. Let’s be real here, 2021 is over and it’s not likely that 2021 numbers will matter much anymore. What is likely is that the base EBITDA against which a multiple is applied to will be on a Trailing Twelve Months (TTM) basis. Projections can be a factor in setting the earn out targets. In other words, if you want to maximize value based on a growing economy, you need to be able to demonstrate consistent higher numbers and that means you would need to wait several years. One to three quarters of growth does not equal a trend we can use to justify as the base EBITDA to apply the multiple against that would make a meaningful difference versus current Trailing Twelve Months. Give that a think and ask yourself, “Am I ready, willing and able to withstand the uncertainly of another economic cycle?”

Bottom line is that waiting can absolutely be the right play, but you need to be realistic as to how long you will need to wait to achieve your goals and assess whether you are up to waiting for the next economic cycle to unfold. You also should consider your tolerance for volatility -since unexpected events sometimes occur.

Also, a broader base of firms available for sale tends to diminish price. Instead of being “exclusive” now, you may well be one of many trying to sell in a few years.

The “sell later” camp also includes title agencies in growth mode. Some of these are backed by private equity and seek inorganic growth either geographically or by product. The last thing they want to do is sell now.

Ultimately, the decision of whether to sell now or later is deeply personal and requires careful consideration of both your business goals and broader market dynamics.

There is a way to de-risk and sell now while keeping the potential to benefit from the business’ growth and upside over the next few years. The key is to stay informed, understand your goals, and be proactive in preparing your business for the future—whether that means selling now or positioning it for long-term growth. In any case, making the right decision starts with having a clear vision and a strategy to achieve it. As with any major life decision, it’s better to act with foresight than regret.

Want more information specific to your situation? Please feel free to schedule a complimentary discovery call here.

–Howard Turk