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What to Consider When You’re Acquiring an Insurance Agency

For many agents, the prospect of being able to acquire another agency is the equivalent of winning the lottery. With bigger premiums, commissions, and bonuses, they can be profitable. When someone is interested in you taking over their baby, you feel honored! However, in order to successfully and painlessly take on the challenge, you have to date first –  this often means you have to do your due diligence. We have been through very successful acquisitions and we have been through some that would make a person want to run for the hills! In order to make the right decision, consider the following objectives we have outlined in this blog: 

Past Ownership Tenure

Some agency owners want out and others want to stay. This is something that should be made clear upfront. If the past owner wants to stay, state the terms and parameters that you are comfortable with. Think about it: How good of an employee would you be now that you have been a business owner? What flexibility are you going to give them and what responsibilities are you going to hold them accountable for? For example, running up the company card at the country club may no longer be an option; this needs to be discussed. In addition, if you do want them to stay, there should be clear terms on what a departure looks like. If it doesn’t work out, you want a clear legal plan. If it does work out, you may not want them there forever! Seasoned agency owners can be a great asset for training and mentoring, if that’s something they are interested in. 


What markets do they have and what do you need? When you start acquiring agencies, it’s very easy to spread your markets thin. If you have a handful of policies with one company, do you really need that company? You want to look at how your book would change with the policies. 


Let’s face it: Older agency owners are the ones generally selling. This means they may not have kept up with modern technology, processes, and how you prefer to do business. You need to have an open and honest conversation about the staff, because, generally, they will become your staff. Acquiring a team of people who don’t fit your culture means you will be a fish swimming upstream. It’s best to have this conversation upfront as you build your plan. 


When you purchase an agency, you need to expect and be prepared for some leaving you.  However, when purchasing a book, you want to give a detailed look at the largest accounts to see the likelihood that they stay. This is critical to determining the purchase price. Also, look to see what clients you want. If the agency has some non-standard business, do you want that? If there are large clients, can you still provide the same services? You want to have a plan for this ahead of time. 

Age of the Book

One thing you may want to consider is how old the average customer is. Generally, the age of the book follows the age of the agency owner. As the purchaser, you want to take the time to identify whether you are acquiring a dying book or something that you can nurture and grow over time. Along the same lines, the monoline percentage is critical. Understanding how much opportunity there is means you can gear up for book growth!

We help agencies looking to perform! If you need help making your next acquisition nice and easy, contact us!


Kelly Donahue Piro

Kelly Donahue-Piro is a game changer in the insurance industry. As the Founder and President of Agency Performance Partners and Co-Founder of the sister marketing company, Agency Appeal, she’s an in-demand speaker at regional and national insurance conferences and a social media and digital marketing trailblazer. READ MORE

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