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The Rough Notes Company Inc.



July 29
09:30 2022


Process is very important in acquisition

By Dan Girardi

Independent insurance agency owners historically have no choice but to become proficient at numerous skills in order to run their agencies. Many of them have nothing to do with selling insurance—payroll, benefits, and hiring, to name a few.

So, it should not be a surprise that when an owner contemplates an asset purchase or merger, they think they can do it themselves. I’m here to say that they cannot and should not undertake this process alone and expect a successful outcome.

There are a number of paths to mergers and acquisitions (M&A); below is one I have seen work throughout my career. While each situation is different, these steps will set the process on proper footing to achieve whatever objectives the owner is seeking—whether that is purchase of another firm or a merger with a strategic partner that has resources to grow the business.

First, from a business perspective, the owner needs to identify the key attributes of the agency under consideration that they want to augment. Where are they looking to grow? What strong suits does the agency already have? Are they trying to bolster existing services or offer new ones? Are they looking to expand the agency’s geographic footprint? Will these new services gain share with current clients or attract new ones?

Identifying how the agency wants to grow will dictate if a purchase or merger is even necessary. Perhaps the goals can be achieved organically. If so, pursuing an organic growth path may be the wiser first step. Typically, internal expansion is easier to control and is more efficient.

If growth cannot be achieved organically in the desired timeframe, the next step must be to establish an internal team to manage the acquisition process. Owners are typically producers, not operators; owners do not know the process and they do not know the pitfalls, so counsel is absolutely necessary. This might be the COO, CFO, or someone with operation and/or financial experience to guide them.

M&A must be a purposeful event for the agency. Do not be penny-wise and pound-foolish. Bring in the right people who will ensure that an acquisition happens properly.

Next, the agency needs to assemble a team of outside advisors constituting at least legal and financial due diligence. The business attorney that the agency uses for daily legal matters will not suffice. An attorney with specific M&A experience is necessary.

Common complaints in finding these experts are that owners do not have those relationships in place and that those advisors are too expensive. Both of these objections hold little weight. If M&A is the best path, searches for competent counsel are easily completed. Owners typically have expansive networks. Use them. The money spent on advice will be saved many times over by avoiding a bad deal.


Identifying how the agency wants to grow will dictate if a purchase or merger
is even necessary. Perhaps the goals can be achieved organically.


In addition to legal and due diligence counsel, it is imperative that the owner secure a lending relation-ship outside of the community bank they typically deal with. Community banks often do not understand the nuances of the insurance business. They do not have the experience with the intangible assets necessary to value the buyer and seller properly.

There are many banks tied to the insurance industry and they are able to lend in much greater amounts because of their abilities to properly value the business. It is important that the banking relationship is established before the acquisition process begins. This will give the owner a sense of what the agency can buy and under what conditions.

With these pieces in place, the own-er is ready to go to market. Another warning: This is a time-consuming process and rarely does the perfect purchase or partner fall into place immediately; owners must be patient. This stamina will be rewarded many times over when the purchase exceeds expectations in the years to come.

In closing, one final piece of advice when the purchase is completed: Owners should be proactive but deliberate in the integration of the purchase. If there is not bandwidth to combine multiple functions of the two firms at once, focus on integrating the management system; put all accounts onto the buyer’s management system. Doing this will not only show the business opportunities but will highlight the efficiencies the owner can take advantage of immediately. Perhaps there are redundancies, legacy offices that are no longer needed and carrier contracts and banking relationships that can be consolidated and leveraged.

M&A can super-charge an agency’s growth trajectory if done right. But buyer beware … go it alone at your own risk.



The author

Dan Girardi, MBA, MSM-RMI, CVA,CPCU, ARe, CSSGB, is chief acquisitions officer of Keystone Agency Partners (KAP), an insurance brokerage platform that acquires and partners with independent insurance agencies throughout the United States. To learn more about the platform, visit



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Jim Brooks

Jim Brooks

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