If you’re planning to grow your existing insurance business by purchasing an insurance agency, you’re choosing the faster way to increase your revenue and expand your customer base. However, unless you do your homework, you won’t exactly know what you’re getting. Let’s talk about the three important factors you’ll have to consider if an acquisition is a major part of your business growth strategy.
What Are the Factors You Should Consider When Buying an Insurance Agency?
Before you decide to purchase a small and privately-held company that doesn’t have public records or audits, you’ll have to take a closer look at the seller’s financials. Verifying the strength of the book is a must. If you’re unsure about the process, it’s best to hire someone who can review bank statements for trust and operating accounts.
Common accounting practices can make a significant impact on your bottom line. For instance, a professional can check if the balance sheets and profit and loss statements are readily available or if the trust accounts are funded appropriately. They can also help you identify your prospective agency’s previous expenses that are supposed to be added back into your cash flow estimates.
Knowing how your prospective agency operates is extremely important. Otherwise, you won’t be able to assess whether their everyday operations will easily merge into yours. Additionally, their affiliations with a certain organization can also significantly affect your ability to secure financing, the sale process, and book transfer.
You’ll have to identify their top performers and decide whether to absorb their existing staff, hire, or lay off employees. Moreover, identifying key client relationships to maintain for your new insurance agency is a must.
Before buying an insurance agency, ask yourself if you can market to and serve its customer base. You should also know if their book of business integrates well with yours.
Purchasing an Insurance Agency?
The team of experts at Energia Consulting Partners LLC is here to assist you with the acquisition of your agency. Contact us today to schedule your appointment.