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Buying an Insurance Agency

Why Most Quality Agencies Are Never Listed for Sale Publicly

The best insurance agencies for sale are never advertised publicly.  Sellers with quality firms, loyal staff, and established carrier relationships do not list their agencies on open marketplaces.  They work with advisors who represent them confidentially to a curated pool of qualified buyers.

Agency Brokerage is the most active sell-side advisor for independent agencies in the $500K–$10M revenue range.  We represent dozens of sellers each year and introduce them to buyers from our proprietary network before any public disclosure occurs.  If you are not in that network, you are not seeing the opportunities.

Get First Notice of Agencies for Sale:  Register for the ABC Insider Newsletter

Registration is free:  Fill out the form at the bottom of the page, white list our domain and don’t unsubscribe from our newsletter.

Please understand that not everyone who inquires on every opportunity will be disclosed.  Part of our job is to ensure strict confidentiality for our clients, which means we have to screen inquiries for fit and capabilities.

When you register, you join the ABC Insider Network.  Here is what that means in practice:

• First notice of new sell-side engagements, delivered by email before public announcement.
• If you are disclosed on an opportunity, access to Agency Brokerage’s team and process — the best in the industry — and a copy of a Confidential Information Memoranda that will give you a comprehensive overview of the agency for sale.
• Exposure to the full range of Agency Brokerage’s sell-side pipeline, which typically includes agencies across personal lines, commercial lines, specialty, and benefits.
• On-going educational content related to agency M&A and financial management.
• No obligations.  Your registration does not commit you to an advisory relationship.

Get Acquisition Support 

If you have identified an agency on your own and need expert guidance on the transaction, Agency Brokerage offers consulting services for select buyers at specific stages of the acquisition process.  By working with our team, you will gain the advantage of our 500+ transaction experience.

Contact us to discuss scope and fees for your specific situation.

What to Know Before You Make an Offer

M&A is a competitive game and preparation is what separates buyers who close from buyers who lose opportunities.  Here are a few suggestions before you engage with a seller:

1. Know your financing capacity.  Speak to lenders and know your borrowing capacity.  SBA 7(a) loans, commercial banks, and other lenders each have different deal criteria, underwriting guidelines, and transaction timelines.  Expect to be able to borrow 4 to 6 x EBITDA, which may include earnings from existing agency.
2. Know the acquisition process.  Be knowledgeable and prepared for the process.  If you are inexperienced in M&A, watch one of our webinar recordings.  Additionally, you will need a preliminary document request list, an LOI template, a full due diligence list, an integration checklist and experienced counsel.
3. Understand the seller’s objectives.  Every owner has different motivations for selling and priorities in a sale.  A growth earnout presented to a principal who wants to retire signals you are not reading the room.  Asking good questions and being genuinely interested in the seller’s story matters more than a polished pitch.
4. Move quickly to submit an offer.  Once the information is in-hand, build a pro forma to understand the cash flow projection, communicate with your lender on financing (if applicable), and move to draft an offer.  Beyond the financial terms, other items to include employment terms of key people, transition services of the seller, restrictive covenants and closing contingencies and deliverables.  Make sure that you address all material points pertaining to the transaction.
5. Have a transaction game plan.  Preparation, organization, delegation and time management are key.  You should prepare and share a comprehensive due diligence request list, expect weekly calls to discuss items as you and the seller move through the process, and update the request list as items are completed.  Make sure to include requests needed for third parties, such as a lender or your attorney.  Engage your attorney early and have drafts of the transaction documents circulated in the first month.  The entire process should not take more than three months from signing of the LOI to closing.
6. Have a transition game plan.  Roughly one month before closing, the conversations should be shifting to integration and how to communicate the transaction to employees, carriers, and clients.  Upon closing, you will need to on-board staff, integrate IT systems, and communicate a positive message to a variety of parties, which is why it is important to work through the game plan with the seller.  It could take 12 months or more for carriers to start paying you commissions direct, so you’ll need to work with the seller reconciling commission payments as well.

If you are new to agency acquisitions or want support at any stage of this process, see our Acquisition Support services above and consider watching our webinar, The Insurance Agency Mergers & Acquisitions Process (click the link).