When Selling And Buying an Insurance Agency

Due Diligence
  We valuate your agency by using a mixture of valuation formulas not just one standard formula to come up with a minimum asking price for your agency. Your company is worth what someone is willing to pay. No formula can give you this exact figure. The key to getting the most money for your agency is by doing the upfront presentation properly and getting multiple offers instead of working with just one possible buyer. It is a fact that agents working in a one on one buyer situation will leave an average of 20% on the table. This situation happens mostly because the seller did not want to pay a small commission or fee. The end result is your hard work is undersold too. Let Insurance Merger Specialists help you succeed in selling your agency.

For Insurance Agency Sales

The Due Diligence Process Explained

The due diligence process of a transaction is where a buyer reviews information on an insurance brokerage they are interested in acquiring.

It is the buyer’s window to inspect the financial, operational, and legal aspects of the business before a deal closes.

It is a critical stage that requires thorough attention to detail and expertise in insurance operations and accounting.

Three Multiples of Value

Anyone selling an insurance agency will have experience in the same or a similar business and be fairly proficient in reviewing management systems and carrier reports. Although, that doesn’t necessarily mean that they should attempt to handle the process on their own.

We foresee the value of our assistance to a buyer as fourfold:


Most due diligence periods provide the buyer with a window of a few weeks.
During this same time, the buyer is likely running another business and communicating with their attorney(s), lender, the seller, and anyone else involved in the transaction.
Time will move quickly, and the seller isn’t likely going to be patient with delays, so delegating the diligence process helps keep the transaction on schedule.


Accounting errors usually originate from premiums being commingled in the operating account, agency bill revenues not being tracked in the trust account, improper account transfers into the operating account, and a myriad of other sources. Aside from revenue inaccuracies, the pro forma earnings can be misstated by sellers or their representatives which we can also identify with a thorough review of the projected expense adjustments.


At the completion of our investigation, we provide the client with a summary report of our findings. Our report is very detailed and professional, which lends credibility to our conclusions when the report is used in negotiations. When we have uncovered misrepresentations in the seller’s financials, clients have been able to use our due diligence reports to successfully receive price reductions in the hundreds of thousands of dollars – an incredible ROI for the cost.

Peace of Mind

Mistakes in due diligence can cost a buyer a significant amount of money and cause them a great deal of frustration.

Having a professional assisting you through the process will add peace of mind for you and your capital partners.

This is the primary reason so many large acquirers and lenders have used our services.

Insurance Agency Due Diligence Reviews These Documents

We look at the quality of the revenue, the adjusted earnings, risks in the book of business, employee/producer compensation and production, and a number of other aspects of the business being acquired.

While every business is different, we have in-depth knowledge of industry best practices and can point out areas of opportunity or risk within your acquisition target’s operation.

Documentation we review includes:

  • Corporate tax returns
  • Financial statements
  • Management system reports
  • Carrier reports
  • Employee contracts and non-competition agreements
  • Bank statements
  • Payroll reports
  • Copies of various contracts
  • Copies of carrier contracts
  • Carrier Production Reports with retention and loss ratios

Most Common Statement Made Is:

“I Am Going To Sell In 3 To 4 Years.”

Our knowledgeable and experienced team have over 75 years of independent agency, property & casualty consulting and banking/lending experience.