Whether considering the acquisition of a Florida insurance agency or the merger of two Florida insurance agencies, fundamental principles of risk management must be incorporated. Proper evaluation of essential, insurance-specific regulatory and unique compliance issues must be completed prior to any agency merger or acquisition. Otherwise, the possible negative legacy regulatory issues could severely and dramatically impact the purchaser or surviving entity in a merger.

There are numerous issues involved in an agency merger or acquisition that would apply equally to other types of non-insurance entities. Fundamental structural issues relating to whether assets or an ownership interest should be acquired are among the considerations in a proposal transaction. If an ownership interest is acquired, all the existing known and unknown liabilities and other compliance issues of the target agency will be assumed by the acquiring party. This process requires thorough investigation and evaluation.

While unique issues relating to the acquisition of ownership of a licensed Florida agency require special attention, standard due diligence that should always be addressed includes: Corporate governance and non-financial internal controls; legal matters, such as litigation and contract issues; operational matters, such as systems integration and premium processing; financial issues, such as accounting, tax, financial internal controls, and asset and debt management; and human resource issues, including policies and procedures and employment benefits. All of these broad subjects include numerous subsets of documents and information also requiring evaluation — typically during a due diligence period — in order to assure there are no material concerns related to the acquisition or merger.