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Top 6 Things to do When Buying an Agency

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For many agencies their growth strategy includes an acquisition component, and the current conditions in the insurance marketplace makes a growth by acquisition strategy very achievable. It is no secret that over half of the current agency owners are approaching retirement age. When you couple that with low interest rates, the anticipated changes in taxes and the presence of private equity driving the multiples for agencies up, for many agency owners there may never be a better time to sell their agency. The M&A marketplace is booming, no question. If you are an agency owner contemplating buying an agency, what does that mean for you? Here is a list of the top six things you should do as you implement your growth by acquisition strategy:
Clearly define your goals

Take the time to write down your objectives and goals for acquiring another agency. Your reasons for acquiring an agency are specific to your situation and may include objectives that cannot be met by every opportunity that comes your way. You may be looking to expand your footprint in a specific geographic area or increase your volume with a particular carrier. Your focus may be to acquire talent and strengthen your team by putting a plan in place for expected retirements or acquire expertise that will open a new area of focus for your agency. Not all acquisition opportunities are created equal, which means that they are not all right for you. Having a clear idea of what you are trying to accomplish will keep you focused on the right opportunity for your agency. 

Get your house in order

Take a good look at your agency, before you add another agency into the mix. You can start by getting your financial house in order. By looking at your numbers, how you compare to the benchmarks, and your performance metrics you can identify areas of strength and weakness that exist inside your agency and better define your goals for a potential acquisition. Next, get your legal house in order. Do you have an operating agreement in place? Do all your employees have signed non-compete and non-piracy agreements in place? You will want to have these agreements in place with the employees of the agency you acquire, so making sure you have these in place with your current employees is important in setting the right expectation and protecting the agency. Lastly, consider your capacity to take on an acquisition. Does your staff have the capacity to take on new work, train, learn new technology or possibly transition accounts to a different carrier? These are all factors to consider ensuring that your team is well-prepared to integrate a new agency. 

Understand what you are buying

Now that you have taken a good look at your agency, it is time to take the same approach when assessing a potential acquisition. Once NDAs are signed, take a good hard look at that agency. What are their numbers, staff makeup, culture, customer profile, carrier mix, loss history, current commitments, and agreements? Consider things like how they interact with their clients, do they accept cash payments or have a high volume of walk-ins?  How do all these things compare and compliment your situation and the goals that you have defined? This process should identify areas of synergy as well as potential problem areas. You will need to consider many areas in this process, and it should not be something you do alone. 

Build the right team

Making the decision to buy an agency is a big one and can be costly if you do not invest in the right advice. Enlist the help of a CPA, lawyer, valuation expert, and lending or banking expert that have experience in our industry. Agencies are unique, they have one of the highest retention rates, and it is important to get the best advice by surrounding yourself with experts that are very well versed in these types of business transactions inside our industry. They will be able to help guide you to ask the right questions and get all the information needed to complete the due diligence process so you can make an informed decision. They will also provide you with the best advice about funding the transaction appropriately, understanding tax implications and help you ensure that all the appropriate agreements are in place. 


As with all things, communication can make or break the experience. In these types of transactions having open, honest communication throughout the process is key. Communication is the key to negotiating the terms of the agreement as well as how the agencies will be integrated. This step is critical to the success of this process. Once you have outlined the plan, knowing when and how to provide the right message to all parties can be tricky, though.  The timing of when you communicate to your staff, your carriers, your clients is all very important. Utilizing experts that have experience in this area can help you navigate the timing and messaging to all parties involved. 

Work the Plan

Once the deal is signed, the work begins. Implementing the plan that you have defined for integrating the two agencies is a critical step in the process. It is as critical as getting to the agreement itself. This is the that impacts the day-to-day for you, your team, and your clients, so be sure to give it the time and attention it deserves. The people in your agency are the heart and soul of your culture. Making sure that everyone is part of the integration process will go a long way. Change management takes time, clear communication, a willingness to listen and adjust.

Key Takeaways

An acquisition growth strategy takes time and proper planning to be done well. If you are clear in your objectives and use those as your guide you will identify the right opportunities for your agency. Put a team in place that will provide you with the right insight and support every step of the way. Great communication is key. We are in the relationship business, and your people are your biggest asset.