If you are a buyer interested in acquiring an existing business to enter into the insurance arena, or expanding your own agency through an acquisition, you need to have a clear vision of your objectives to target the right insurance agencies for sale. Do you want to buy a book of business, or a fully equipped agency that has a physical office, equipment, and staff? Are you looking for an independent agencies that offers a broad range of coverages, or specializes in a particular market niche?

Of course, anyone who is considering purchasing an insurance agency should be acutely aware of the details surrounding the sale of any agency to determine the right valuation. Factors to consider include past performance, projected earnings, tangible net worth, physical assets, quality of employees, risk management, and the amount of working capital. Here are some addition questions to ask to be sure that buying an insurance agency is the right move.

• Why is the current owner selling? It is vital that buyers get real answers from the current owners about why they are choosing to sell. Many times, it is a legitimate reason like a desire to move upward, to retire, or perhaps to make a geographic relocation. Sometimes, though, there may be hidden financial troubles that led to the sale of the agency. Do some digging now so you won’t regret your decision later.
• What is the company’s current advertising strategy? Making connections now with any advertisers or marketers who have worked with the company in the past will save the new buyer a lot of energy, time and, potentially, money down the road.
• Is there room for the agency to grow? Depending on the new buyer’s financial goals and aspirations for his or her new insurance agency, it’s important to have a good handle on the agency’s potential for growth in the future. This involves doing some research into the customer base and previous customer satisfaction with the agency’s services.
• What are the agency’s lease terms? If purchasing an insurance agency with a physical office building, pay careful attention to the exact location of the property in question, as well as the terms of its current lease. Make sure you can afford to maintain the lease at the current location. Moving your new agency can be one of the quickest ways to lose the customer base you just acquired.

In addition to the factors listed above, if at all possible, get to know the staff before purchasing an insurance agency (if the purchase includes a transfer of personnel). Find out what kind of employee retention rate you can expect and try to get a good feel for how well the current staff works together. If you have to bring in all new employees when you make the purchase, it could cause a significant disruption and could cost you customers.