Top 3 Mistakes to Avoid When Buying an Insurance Agency

Springtree Group facilitates mergers & acquisitions for agency owners and those who are interested in buying an insurance agency. Our primary objective is to ensure successful, mutually beneficial transactions that leave both parties better equipped to achieve their career goals, financial goals, and personal goals.

No doubt you’ve observed that our sector is rife with retellings of both wildly successful hand-offs and catastrophic failures. Such mistakes are a clear danger to one’s finances and business opportunities, but don’t be deterred. They are avoidable with informed foresight and proper strategies. To that end, let’s review the most common mistakes to avoid when buying an insurance agency.

  1. Being Drawn in by Incomplete Information

When buyers pursue sellers independently, they will have to speak with the agency’s owner directly. The hope is that the seller will disclose all pertinent information, which would position the buyer to make an informed offer.

What’s more likely to happen is that the seller will be acting in their own interests, presenting just enough encouraging information to snag a robust offer. At this early stage of negotiation, a buyer may find they’ve wasted days or weeks courting a seller who doesn’t even run an agency that meets the buyer’s criteria.

Consider, too, that even an appealing agency presented with too little information will require renegotiation at a later stage. Altering the offer can result in the total dissolution of the deal, meaning that even more time will have been wasted.

When you join forces with us from the moment you decide to purchase an agency, Springtree Group will work for you and obtain valuable information from any seller. Our goal is to preserve a delicate balance in our pursuit of information. We want to uncover all relevant facts and considerations without becoming a nuisance to the seller. Losing a great opportunity to your competition is another pitfall we’re determined to avoid.

  1. Acting on Advice from Ill-Informed Advisors

As you analyze whether or not you’re in a position to purchase an agency at all, you’ll work with your accountant and your attorney—and you should. Still, they aren’t likely to have any experience with M&A of independent insurance agencies. They likely don’t understand the industry, and won’t be able to analyze an agency’s data or carrier statements.

Partnering with an advisor or broker is only advantageous if the advisor is truly an informed expert. Springtree Group brings decades of experience to the table, and we are proud of our track record of hundreds of successful transactions. We advocate for both sellers and buyers to work with an advisor or broker.

However, every party involved will bring their own goals and perspectives to the transaction. The key is ensuring that you and your advisor’s goals and strategies are in agreement. We want to understand your needs and expectations from the moment we first work with you, and we want to answer your questions, as well. Communication is the cornerstone of any successful relationship, and ours will be no exception.

  1. Making a Move Without Having Secured Financial Backing

Most deals that fail are torpedoed by financial backing falling through. Springtree Group’s in-house finance department will ensure that you are fully backed before you make your offer. Having this massive hurdle cleared with complete confidence will make this process a much less stressful experience—and you deserve nothing less.

Are you ready to begin your search for your next M&A opportunity? Contact Springtree Group today. We’re here to facilitate your success.