The Springtree Group team has done a lot of reflection on the most common reasons insurance M&A transactions fail. Today, we’ll share what we consider to be the top 5 reasons for failed M&A events in the hopes that our insights will help you avoid these pitfalls in your own endeavors.

  1. Underestimating the Competitive Nature of the Insurance Agency M&A Market

The private insurance M&A market is fiercely competitive. Prepared buyers snap up healthy, profitable agencies so quickly that the larger buying market never learns that these businesses are available to buy.

Springtree Group’s buyers are kept informed of these prime businesses several times per month. If you would like to receive our alerts highlighting agencies on our radar, join our buying group today.

  1. Foregoing an M&A Team

Purchasing an insurance agency is never a simple transaction. Unlike buying a vehicle, or even a house, you can’t go it alone. Instead, it’s essential that you prepare by assembling a team of savvy professionals.

Springtree Group will serve as your M&A advisor and finance team. However, it’s also essential to hire an attorney, and potentially an accounting resource.

Without having a team assembled before you place an offer on an agency, you risk losing to a fully prepared buyer at the most crucial stage. Sellers will always opt to work with the buyer who is ready to step in an ensure the continued success of the agency they’ve worked so hard to build.

  1. Failed Financing

 This is by far the most common reason M&A deals fall through. By working with our in-house financing department, you can be sure you are prepared financially when it’s time to place an offer on the agency that’s a perfect fit for your goals.

  1. Lack of Concrete Acquisition Planning

Fewer than half of buyers have an acquisition plan in place when they place an offer on an agency. Springtree Group can help you create a successful process that includes:

  • Ensuring that the agency aligns with your goals
  • Financial matters: deal structure, down payment, operational expenses during transfer, and more
  • In house vs. telecommuting employees vs contractors
  • Management oversight
  • Protocol and process surrounding the onboarding of the acquired clients
  • Direct carrier appointment processes
  1. Poor Integration Planning

Taking over a new business is not something to be handled on the fly. Rather, it’s essential that you have an integration plan prepared to help you reach your targets.

Springtree Group can review your integration plan to ensure you’ve covered the following key areas:

  • Book of business and market carrier transitions
  • Working with an owner who wants to stay on for a period of time and assist with integration
  • Protocol for managing vendors, clients, and existing employees
  • Whether you plan to hire additional staff, downsize, or maintain the status quo
  • Your protocol for systems, procedures, and processes, and how it lines up with how the previous owner did things
  • Internal and external communications

For additional insight into M&A pitfalls, or to obtain assistance tailored to your needs, please contact Springtree Group directly. Our goal is to prepare each of our buyers to succeed in this unique, competitive M&A sector.