While agency mergers and acquisitions can provide scale and reach to brokers in a competitive market, professional liability risk should not be underestimated.

For an agency owner, acquiring an agency or book of business may be both thrilling and worrisome. Incorporating strategic thinking into this expansion plan can result in significant increases in revenue and total portfolio size. Consider the following recommendations for a successful purchase:

It’s critical for insurance agency owners considering a merger or acquisition to have a thorough understanding of the company they’re buying. Is the business model compatible with your existing framework? What role does the seller want to play? Is it a decent business book? All features of the existing framework, as well as the impact of integrating the purchased firm, should be thoroughly understood by agency executives.

The majority of insurance agency takeover agreements are predicated on cash flow. A lender considers the regular revenues from the book of business to be the asset. Understanding your insurance agency’s cash flow and what is currently driving income is crucial to determining the health of your company. Bankers will also want to look over any probable worries about future cash flow, as well as comprehend your existing debt and your business plan for future development.

We are a Texas based M&A Acquisition and Advisory practice focused on the Independent P&C Insurance Market. Whether you are looking to retire, seeking perpetuation planning or simply exploring options, let’s talk.

Our parent company, Davidson Stewart Morelock, has been an independent P&C agency since 2008, with our principals offering over 50 years combined experience in the insurance industry. We have successfully worked with a number of agencies creating mutually beneficial solutions for owners, partners and buyers.