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I Want to Buy – Now What?

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The best place to start in evaluating a potential acquisition is with you and your own agency. If you are clear on what you are looking for in an acquisition the process of evaluating opportunities becomes much more efficient and effective. Ask yourself these important questions:  

  • What are your current agency goals? 
  • How does this acquisition help you achieve those goals? 

It is always best to pause and consider what you are trying to accomplish to ensure that you are able to maintain focus. An acquisition is a big undertaking, so if it is not aligned with your overall goals, it can impact your ability to achieve what you are trying to accomplish. 

Here are some questions to consider before you get too deep into the process of evaluating another agency. I believe these will help you determine if the acquisition opportunity has the potential to be fit for you and your agency.

  • What is your current growth plan? What would strengthen it? 
  • Are you trying to grow into a new geographical location? Niche? Line of Business?
  • Are you looking to add a particular carrier or gain access to certain markets? 
  • Are you looking to expand your team and expertise? Which roles? What expertise? 
  • Are you looking to gain and develop future owners of your agency? 
  • Are there specific relationships that you are trying to develop and build? 
  • Are you looking to expand within your current footprint or into a new or complimentary niche? 

We all know that acquisition add premium volume and revenue to your agency, but not all revenue is created equal. It is important to consider how a potential acquisition will fit into your overall plan. Once you have an idea if this potential acquisition fits into your overall plan, spend some time considering how it aligns with you and your agency. You will need to look at it from several perspectives including, geographic location, carrier and markets, current relationships and contracts, expertise, performance, customer type and behavior and most importantly culture.

Book of Business Alignment 

What is the makeup of their book of business? What is the average size of their accounts? Are there any large accounts, specialized accounts, or accounts that would be at risk in a transition due to personal relationship with the current owner? Is the book heavy in personal lines, commercial lines, Life & Heath? If it is heavy personal lines, what percentage is home, auto, monoline? If it is heavy commercial lines, what is their focus, and do you have the right expertise to facilitate a seamless transition of their accounts? Are there opportunities to expand and cross-sell? 

Customer Alignment 

What type of customers does the agency attract? Gather data on their average account size, average policies per customer, where customers they located, and how long have they been with the agency. In addition, be sure to ask questions that help you understand the customers expectations and behaviors like: How often do you talk to your customers? What percentage of your customers come into the office for appointments? To make payments? What percentage pay online? Utilize your app or website? Expect to pay in cash? What percentage of your customers have minimum limits or are monoline customers? Asking questions like these will help you understand the fit and alignment with your agency and your practices, the gap in expectations, the need for cultural change and ultimately help you determine the risk that may exist in retaining the business.

Carrier Alignment 

This is an area where alignment can make a huge impact and misalignment can do the same. What is the current carrier overlap? What will this purchase do to your volume, loss ratios, commission rates, potential contingencies, and overall revenue?  For those carriers that both agencies have access to, be sure to consider how each of the agencies are accessing the carrier. Do both agencies have direct appointments or is their access through a network or aggregator? Do not assume that the shared carrier will automatically move all of the business to be written under the direct appointment, based on your volume and performance the carrier may decide otherwise. 

For the carrier appointments that differ, it is exciting to consider the potential impact that gaining access can have on your agency. It may open up an opportunity to cross-sell and expand your book, but do not overlook the process you need to go through to gain access to that carrier. You will need to consider the approval process that the carrier has in appointing new agencies. You should not assume that the carrier will appoint you automatically upon the purchase of an agency. This consideration often times happens too late in the process and agencies are faced with rewriting books which is both time consuming and laborious on top of the integration activities that they are already facing. 

Geographic Alignment 

There is no question that our world is getting smaller, but many agencies still have large concentration of their business within a close radius of their location. It is important to consider where the agency is located, and how much of their business is local. This will help you determine the need to maintain multiple locations, the potential commute time, and how easy will it be for the team to work together and the potential synergies that may exist if this merger occurs. You will also need to consider how you will logistically manage the integration in the short-term and what the management of multiple locations will look like in the future.  


One of the best indicators of the future is the past. As you are assessing the potential purchase you need to look at their performance. This will also tell you a great deal about the culture of the agency. The best place to start is with retention. What is their retention? This can mean many different things, so it is important to be clear on what their current retention rate is for revenue, premium, policies in force (PIF), and customers. What type of business are they losing? Is there a trend? Are they growing? What is their growth rate over the past three years? Where is their new business coming from? What is their loss ratio? What is their revenue per employee? Do they align with yours or will the volume of work that your agency handles be a shock to their staff? 

People & Relationships 

The most valuable part of every agency is their people. They are the heart and soul of your business, the face of the agency and the core to the relationships. For many agency owners, taking care of their staff is one of the top priorities as they contemplate selling their agency. It is personal, their staff is considered part of their family. It is important that you take the time to understand the talent that exists, the desire to continue to work, their tolerance for change, how the team will fit together and complement each other and the culture and expectations that team operates within. To gain an understanding of this, you will need to ask about tenure, roles, accountability, compensation, expectations and the current leadership and management styles. Is the staff used to a hands-on manager, weekly sales meetings and metrics or do they work in an environment that is completely autonomous? Gaining an understanding of the people, talent and culture is one of the most important steps in an acquisition. The current owner is a key player in any acquisition, you will need to understand their expectations and willingness to work to transition their customer, carrier and staff relationships as well as their desire to continue to work. All of these details greatly impact the expected future performance, ongoing costs and ultimately the price that you may offer. 

Technology & Culture 

Integration of agencies and cultures will require a good understanding of the technology, processes that exist in both organizations. The staff inside an agency that operates with paper files will have a big learning curve if they are transitioning into agency that operates completely paperless. Agencies that are on the same systems can also have a much smaller learning curve but should still expect a learning curve related to the utilization of the technology or the processes and procedures that vary between the organizations. Taking an inventory of all of the technology that is utilized as well as any processes and procedures that are in place is a healthy exercise in considering the fit between the agencies. 

Contracts & Agreements 

In addition, you need to look at all of the contracts that are in place and how they may impact the purchase. What do the corporate documents state for both agencies, and what is the process they must go through to sell or buy an agency?  Does the agency have network, cluster, aggregator relationships that could impact the sale of their agency? What is the approval process and is continued participation in that group a requirement? Does that fit with your goals, and do you have any agreements or relationships in place that will prevent you from joining or that may cause you additional fees due to your carrier relationships? Do they have referral partners that may be impacted by a transition of ownership and change the future new business leads and future performance expectations of the agency? Are their vendor commitments that will need to be satisfied? 

There is a lot to consider when purchasing an agency or even a book of business, and you should expect as you work through the process several other considerations will arise. If you stay focused on what your goals are and how this opportunity will help you achieve those goals, it will keep the process centered and focused. It is easy to fall in love with the idea of an acquisition. The more you know, the more likely you will make a strong decision that leads to a smooth transition. For more information visit or contact Carey at