Home › Action Items for General Business and Financial Statement Review

If you’re looking to grow your existing insurance business, you’re probably keeping an eye out for insurance agencies for sale in Atlanta, GA. Since acquisitions are the fastest way to expand your base of customers, it leads to a dramatic increase in agency revenue. However, the best way to ensure you know exactly what you’re getting is to conduct due diligence on your prospective agency. Two of the crucial areas you should look into are general business and financial statements. 


Due Diligence for General Business and Financial Statement Review

General Business

Besides identifying the agency’s clients and their number of years as clients, you should also know about the commission volume, annual fees, and lines of business. Moreover, identifying the prospective agency’s strategic partnerships and alliances with other organizations is a must. For this reason, it’s best to review contracts, pricing detail, and associated client service. Remember to generate a list of all company locations and their complete addresses. While you’re at it, be sure to indicate if they’re owned, leased, or sublet. Additionally, you should also review minute books on meetings of board directors, shareholders, and other board committees for the past 10 years. 

Financial Statement Review

It’s important to note that the process of finding and reviewing your prospective agency’s financial information may take more time if it’s a small and privately-held company. This type of organization doesn’t have public audits or records in most cases. Unless you’re willing to devote 80% of your time and energy to verifying the strength of the seller’s book of business, it’s best to hire a professional to verify all the financial information independently. When you’re all set, be sure to look into the agency’s annual financial statements, auditor reports, and management responses for the past three years. Assess their budget, cash flow, liquidity, sources of funding, and their allocation to expenditures. Review the aging schedule for accounts receivable and worker’s compensation. 


Looking for Insurance Agencies for Sale in Atlanta, GA?

The team of professionals at Energia Consulting Partners, LLC, is here to assist you with the acquisition of your insurance agency. Get in touch with us today to schedule an appointment.